We all woke up yesterday to the news Standard Life was pumping £100m into its pension sterling fund to compensate investors who lost out when almost 5 per cent was wiped off the value of the fund which was supposedly “wholly invested in cash”.
After initially insisting that the “totality” of literature available (hmm…) made it clear what the fund was invested in – namely a truckload of mortgage-backed securities – the firm has made a U-turn and admitted it was wrong.
In a statement, managing director of customer service John Gill says: “Standard Life would like to take this opportunity to apologise to any customers who have been affected by the fall in value of this fund. In hindsight, some of the literature supporting the fund fell short of our own high standards and it is important that we put this right.”
Whether it was a gesture of good will or, perhaps more likely, stern words from its lawyers, Standard Life’s move has to be commended and sighs of relief are being breathed around the UK.
Pharon IFA director Nick O’Shea says: “I am satisfied with what Standard Life has done. The revaluation really damaged our view of the firm to the extent that we thought they were being disingenuous about the fund and the way they had operated it. But I do think they have done the right thing, whether they had a choice or not.”
While Richard Jacobs Pensions & Trustee Services managing director Richard Jacobs is also grateful the firm is compensating investors he is sceptical about whether the move will restore Standard Life to its former glory in the eyes of advisers.
He says: “Based on the literature the firm provided on the fund, I do not see that Standard Life had much choice but to compensate investors. As such, I do not see that this will restore all that much confidence in the firm. They are not doing anything generous, they are simply rectifying a situation they should not have gotten themselves into in the first place.”
The question now, though, is whether investors bed in or leave the fund, considering the toxic assets are here to stay.
Informed Choice joint managing director Martin Bamford says: “There are still decisions to be made by individual investors about whether the fund remains suitable for them because, while Standard Life has restored the price position, the underlying assets remain unchanged so it is still not a cash fund because of its high exposure to mortgage-backed securities.”
Whether Standard Life deserves copious amounts of praise or not, this is a win for the advisers who threatened to boycott the firm for future business, the press, including Money Marketing who originally broke the story and led the way in keeping up pressure on the provider and most importantly the investors who bombarded the company with complaints.