Royal & SunAlliance's shares sank by 4.5p in early trading this morning after the company was stung by a record £1.35m fine for failing its pension customers.
More than 13,500 customers could have missed out on compensation totalling more than £32m if the FSA had not undertaken its own investigation, the regulator said.
It fined R&SA for failing to identify people who were wrongly sold pensions.
Carol Sergeant, managing director for Regulatory Processes and Risk at 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.
"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."
The blow for R&SA came just as the company's stock was beginning to show signs of recovery after being pushed down by disappointing interim results and is likely to increase pressure on chief executive Bob Mendelsohn to quit.
It has already closed its life and pensions business and was fined £225,000 in 1998, with £100,000 costs, for earlier pensions mistakes.
Duncan Boyle, Royal & SunAlliance's UK chief executive, stressed the fine related to problems from the past.
He said: "Once the process problems were uncovered in 2000, we took urgent action including allocating substantial additional resources to ensure the issues raised were resolved."
The stock was trading at 127.7p, down against its opening price of 130.1p.
