Customers reimbursed for an administrative fee overcharged by Skandia Life

The Consumer Ombudsman has completed the handling of a matter concerning the pension insurance company Skandia Life’s unit-linked pension insurance. More than 4,400 Skandia Life customers have now been reimbursed for an administrative fee about which the company had given incomplete information.

Skandia life collected an additional 1% charge from the savings of its personal unit-linked pension insurances. Misleading information about the meaning of the cost had been given in the calculations in the offer made to customers in connection with the marketing of the policy.

Charging the administrative fee has a significant impact on customers’ pension savings. Depending on the amount of contributions, the saving period, the value of the investments and changes in the value, the customer’s generated savings may be reduced by up to tens of thousands of euros.

The Finnish Insurance Complaints Board handled the matter and recommended that Skandia Life stops collecting the fee. The company did not however comply with the Insurance Complaints Board’s recommendation. The Consumer Ombudsman considered it important to set a precedent for similar cases and assisted a customer in making a claim at a district court in 2006. The District Court and later also the Court of Appeal ruled that Skandia Life was not entitled to collect the one-percent administrative fee because the calculations in the offer gave the customer misleading information about the cost.

The matter was taken to the Supreme Court of Finland, which confirmed in 2010 that the calculations in the individual offer to the customer had been misleading and therefore the company may not collect the administrative cost. According to the ruling, Skandia Life was obliged to repay the fees it had already collected back to the customer’s pension policy.

After the ruling, Skandia Life and the Consumer Ombudsman started negotiations on how the decision applied to other customers in a comparable situation. As a result of the negotiations, Skandia Life offered to reimburse all those customers who had received the offer referred to in the Supreme Court ruling when making a contract on the insurance policy and who forwarded a copy of the offer to Skandia Life.

Skandia Life informed all the customers with a unit-linked pension insurance about the matter by post, with the number of those customers running into tens of thousands. This was to ensure that all the customers entitled to repayment would get an opportunity to make a claim.

Skandia Life has now handled all the reimbursement claims it received and has informed the Consumer Ombudsman that it has repaid costs that were overcharged to the pension policies of more than 4,400 customers. The company will also pay interest on late payments.