The Financial Services Authority (FSA) today fined Horsham-based Royal and Sun Alliance (RSA) £1.35 million - the largest ever penalty under the pensions review.

The review was set up by the Personal Investment Authority, an FSA predecessor, after the mis-selling scandal of the Eighties.

Its brief was to make sure firms worked through customer bases and identified all cases where people could have been mis-sold pensions.

Companies were then obliged to handle any such cases correctly and quickly.

But a visit by the City watchdog to RSA two years ago unearthed 13,500 cases, nearly a quarter of the insurer's case load, that had not been reviewed.

FSA managing director for regulatory processes and risk Carol Sergeant called the penalty significant.

She said: "The FSA expects firms to identify and provide compensation to all consumers due redress and to complete the pensions review on time.

"This is a significant penalty to reflect the serious nature of RSA's past failings in its handling of the review."

RSA was fined £225,000 in 1997 but today's penalty is the largest ever under the review and dwarfs the previous highest fine, Prudential's £650,000.

RSA incurred such a high charge for two key reasons.

The first was it had been fined before.

The second was there was also a risk the cases would not have been discovered without the FSA's intervention, meaning that investors could have missed out on more than £32 million in redress.

Ms Sergeant said: "The FSA is determined to ensure consumers who are due redress from firms, for whatever reasons, have their cases dealt with in a timely and effectively manner.

"The responsibility for delivering this rests with senior management of firms, who must ensure proper control and monitoring of such work."