The life operation Royal & Sun Alliance, one of the U.K.”s largest insurers, has been fined £1.35m by the Financial Services Authority, the Financial Times of London is reporting today.

The fine is the largest ever based on a pensions review. Prudential, the life assurer, had been fined £650,000 by the FSA as part of its pensions review in October last year.

RSA failed to identify 13,500 people who had been mis-sold personal pensions. If the FSA investigation had not been undertaken those 13,500 consumers may not have been paid compensation exceeding £32m.

“The FSA expects firms to identify and provide consumers due redress and to complete the pensions review on time,” says Carol Sergeant, managing director for regulatory processes and risk at the FSA. “RSA failed in its identification of cutomers who might have been due redress, it failed to complete review work on time and its management failed to monitor the process effectively.”

Duncan Boyle, RSA’s UK chief executive, says, “Today’s fines relate to certain past issues which we very much regret. Once the process problems were uncovered in 2000, we took urgent action.”

RSA had previously been fined £225,000 for poor conduct during the pensions review, following a 1997 visit by the FSA’s pensions review monitoring department.

The UK insurer has also been in the spotlight recently after it was cutting 1,200 UK jobs. The company also confirmed it was short of capital . RSA said it was “actively considering” raising capital from the markets and that it was on track to achieve another target – raising £800m this year through the sale of non-core assets.

There has also been calls from RSA’s biggest shareholders for the resignation of Bob Mendelsohn, its beleaguered chief executive of four years, due to lack of confidence in his ability to manage the company through its troubles.