Insurer Prudential has been fined £23.8m by the UK Financial Conduct Authority (FCA) for selling annuities to customers without informing them that they can get better deals on the open market.

During the probe, the British watchdog found that Prudential sold retirement income products directly to its existing pension holders between July 2008 and September 2017.

The existing UK law mandates that firms should inform customers that they may get a better rate if they look around on the open market.

The FCA also criticised Prudential for failing to monitor whether call handlers utilised proper documentation. The documentation offered to call handlers created a risk of the open market option not being mentioned.

Risks escalated owing to sales-linked incentives for call handlers, the regulator said.

FCA executive director of enforcement and market oversight Mark Steward said: “Prudential failed to treat some of its customers, who could have secured a better deal on the open market, fairly.

“These are very serious breaches that caused harm to those customers. Prudential is now rightly focussed on redress and today’s financial penalty reinforces the cardinal obligation of fairness that firms owe to customers.”

To identify affected customers, Prudential agreed to carry out a review of past business related to non-advised annuity sales.

The firm accepted the FCA’s findings and qualified for a 30% discount on the fine, which would otherwise have been £34m.

Prudential has provided nearly £110m in compensation to around 17,240 customers as of 19 September 2019.