The Actuarial Review Company claims Widows advised schemes to give up investments which guaranteed a 7 per cent yield per annum in favour of its own Pension Managed Fund.
According to ARC this advice saw schemes collectively lose over £300m but it predicts the life office may have to pay as much as £1bn in costs and compensation. It has sent a dossier of complaint to the FSA urging it to launch an immediate investigation.
Director Roger MacNicol says: “The switch advice was given by employees of Scottish Widows, not by independent actuaries. Life assurance companies exist to assume risk but this is yet another example of a major brand simply abdicating its responsibility to clients. As a result the schemes are significantly less well funded, less solvent and require a higher contribution rate from both employer and employee. In some cases the schemes have been forced to close. Quite clearly Scottish Widows has a case to answer.”
A Scottish Widows spokesperson says: “To our knowledge we are not in receipt and have no advance notification of the dossier that has been reportedly submitted to the FSA, FOS, Pensions Regulator and Actuarial profession. We are only aware of one complaint ever being lodged from a company pension scheme relating to a similar issue to the one described. We are not aware of any High Court action being taken against Scottish Widows by a company pension scheme on this issue.”
The FSA declined to comment.