Prudential Japan executives take pay cuts over staff misconduct involving customers’ money
President Hiromitsu Tokumaru and two others will take a 30% reduction in compensation for three months.
Prudential Japan’s executives will reduce their pay by 30% for three months, according to a statement released on Oct 8. This disciplinary action follows an investigation into widespread misconduct by employees at the US insurance group’s Prudential Life unit in Japan. The top three executives – President Hiromitsu Tokumaru and two others – will accept the pay cuts as a sign of responsibility for the issues that arose.
The investigative panel found that the problems stemmed from structural issues in the unit’s governance framework and business model. The scandal is part of a series of scandals troubling Japan’s insurance industry in recent years, which has eroded public confidence at a time when households are seeking to invest more savings. Japan’s financial regulator is considering penalizing Prudential Life with possible measures, including a temporary suspension of operations.
The company set up an investigative committee after disclosing that over 100 employees, including current and former sales staff, engaged in misconduct causing over ¥3.1 billion (S$25.1 million) in customer losses. The misconduct ranged from selling fake investments to borrowing money from clients. Prudential Life has temporarily halted new life insurance sales since February to focus on reforming its governance and sales practices.
The company plans to revise its evaluation and compensation systems to prioritize long-term customer relationships, compliance, and sound sales practices. During this period, Prudential Life has extended its initial 90-day suspension until early November to ensure the reforms are completed.
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