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BBB chief Lockyer says he has saved the industry millions

Berkeley Berry Birch was forced to dump the liabilities of its subsidiary because another round of misselling claims would have brought down the whole group, says chairman and chief executive Cliff Lockyer.

Defending BBB&#39s controversial decision to leave the liabilities of Berry Birch & Noble Financial Services in a wound-up company, Lockyer says that the action has protected consumers and saved other IFAs and life companies millions.

BBB says it was taken by surprise by the extent of BBNFS&#39s liabilities – which related to pensions and mortgage endowment misselling – and has so far poured £14m into the defunct IFA, £8m more than it had envisaged.

He said that the FSA was not blocking the winding up but that it would not allow BBB to take any assets out of BBNFS until all potential claims have been dealt with.

BBB says if it had not wound up BBNFS, the whole group would have gone to the wall if another round of liabilities had surfaced after the company&#39s professional indemnity cover runs out in August. BBNFS&#39s liquidator has written to all existing clients telling them to claim by then if they think they have been missold.

Lockyer says that by ridding BBB of BBNFS&#39s liabilities, he has saved the Financial Services Compensation Scheme and, as a result, other IFA businesses and life companies the expense of any possible BBB liabilities as the action has allowed the company to survive.

He says BBB&#39s management would have been answerable to shareholders if they had failed to take the financially sensible course of action that was open to them. Lockyer says that BBB had considered selling BBNFS but “only a madman would have bought it”.

Lockyer says: “If, in a year&#39s time, we got hit again, we would not be able to handle it and BBB would be dead. Where there is a gangrenous part of the business threatening to bring down the whole, company law allows you to cut it out.

“We have acted not just responsibility but, I think, amazingly generously. We have saved IFAs and the insurance companies millions.”


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