The FSA is cracking down on financial firms

The Financial Services Authority (FSA) said the fines related to mis-selling during 2000 and were made worse by the fact that all insurers had been forewarned of the danger.

Salesmen at Scottish Amicable, now part of Prudential, had not alerted customers to the fact that the endowment policies may not pay off their mortgages.

But the FSA told the BBC that the firm was unlikely to be the last insurer fined for misleading customers.

Poor advice

There was clear guidance to the industry at the time... and yet mis-selling continued Andrew Procter, FSA

Poor selling of home loans is an area in which other financial firms have already tripped up.

The FSA said the fines related to the mis-selling of endowment mortgage policies and for faults in Scottish Amicable's sales systems, which had a large number of its customers to potential loss.

"The failings arose because advisers did not place appropriate emphasis on identifying whether a customer was prepared to take the risk that their mortgage might not be repaid at the end of the term," said the FSA in the statement.

The FSA's director of enforcement, Andrew Procter, told BBC Radio Five Live that the regulator was coming down hard because companies had already received guidelines on selling.

"There was clear guidance to the industry at the time... and yet mis-selling continued."

Mr Procter said 34,000 policies were being reviewed to see if customers were owed compensation and that Scottish Amicable was also offering to review policies dating back to 1988.

More fines ahead

There will be others - there's no question about that Simon Procter

Endowments became popular policies during the 1980s when the stock market was in a more healthy condition and investment returns meant policies could pay off mortgages when they matured.

But the recent slump in share values have knocked returns and countered those previous assumptions.

Consumers can now claim that they were mis-sold the policies if they were not adequately warned about the risks associated with endowments.

Other groups Abbey Life and Royal Scottish Assurance have already been fined for similar offences.

And Mr Procter said Prudential was unlikely to be the last.

"There will be others - there's no question about that."