The Financial Services Authority (FSA) subsequently got involved and these people were identified and offered compensation valued at �32m.

The Financial Services Authority (FSA) said it has now fined certain companies within the Royal & SunAlliance group for breaking rules during its review of personal pension sales.

A spokesman for the FSA said: ""This is a significant penalty to reflect the serious nature of R&SA's past failings in its handling of the review."

However, the watchdog acknowledged that since the last review, the insurance group has taken immediate action and cooperated fully.

Not the first time

The personal pensions business has faced a barrage of criticism in recent years.

Many companies were accused of selling unsuitable products to people, with their sales staff motivated by high commissions rather than a desire to meet their customers' needs.

Duncan Boyle, chief executive of the R&SA said on Tuesday that the "fine relates to certain past issues which we very much regret".

Mr Boyle said as soon as the problems were uncovered in 2000, the company took urgent action and allocated additional resources to the issues.

R&SA failed in its identification of customers who might have been due redress, it failed to complete review work on time, and its management failed to monitor the process effectively

FSA

But this is not the first time the insurance giant has been fined.

It was ordered to pay �225,000 in 1997, again for failings in their conduct of pensions review following a visit by the FSA's pensions review unit.

The financial watchdog re-visited R&SA in July and August 2000 to monitor its progress with the pension review department.

This time it found "systematic weaknesses" in the insurance giant's internal controls.

The FSA said: "R&SA failed in its identification of customers who might have been due redress, it failed to complete review work on time, and its management failed to monitor the process effectively".