Chile watchdog growl at insurers, AFPs

Chile's pension watchdog SP has launched a probe into the sale and intermediation of annuity and planned retirement products.

The investigation focuses on pension advisors and life insurance sales executives and covers the past four years.

In Chile, people approaching retirement age use a system called SCOMP to compare pension options available to them and obtain offers.

During a monitoring process, SP said, officials found that copies of formal pension plan offer certificates had been used instead of original certificates by annuity sales executives and pension plan advisors with the aim of speeding up the closing of deals. Some of these copies had been tampered with, it said.

Over the past four years about 197,000 people have obtained pensions through SCOMP.

Officials are analyzing about 6,000 cases in which people accepted an offer within three days of the original certificate being issued. Under current regulations, a person, to accept an offer, must be in possession of an original certificate.

"From this, it is possible to infer that in an important number of cases pensioners may not have had the original certificate in their possession at the time of signing up for a plan, since these are sent to homes by certified mail," SP said in a statement.

Officials have studied about half of the 6,000 cases and found about 1,032 irregular certificates. In none of the cases in question there were differences found between the original and the copy in terms of the companies making offers, the number of offers received, the size of the offers and their order, SP said.

SP and insurance industry watchdog CMF have taken a series of measures including ordering SCOMP to tighten oversight, ordering life insurers and AFPs to ensure that the certificates they are presented with are the originals, and holding meetings with sector chiefs. Nine pension advisors have been suspended and others are being investigated.

SP and CMF are due to present new regulations within the next few weeks aimed at making it easier to understand the pension plan offers made to those about to retire.

Launched in 2004, SCOMP is controlled by the country's association of private pension fund administrators AAFP and the country's association of insurers AACh.