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Crombie admits tax changes and switching review dented sales

Standard Life chief executive Sir Sandy Crombie has admitted the Government’s tax changes and the FSA’s work on pension switching advice have contributed to a 26 per cent fall in new Sipp business in the first half of 2009.

Standard Life’s net inflows into Sipps reduced from £1.4bn to £959m this year despite the fact the number of accounts increased by 13 per cent to 74,700 during the period.

New business sales dropped 26 per cent to £1.5bn from £2.07bn in the first half of 2008 due in part to market movements on average incoming transfer values.

But Crombie says Government and regulatory intervention has also contributed to the fall.

In a conference call this morning, he said: “The tax changes have certainly caused an element of confusion about how the forestalling rules would be applied. It is undoubtedly true that that has had an impact.

“The other thing that has had an impact is the thematic review the FSA has been conducting on Sipps with people rethinking their approach to selling and advising them. I would not want to exaggerate but I do think there has been some confusion caused.”

Today’s interim results also show Standard Life’s operating profit after tax on an EEV basis fell 35 per cent to £243m in the first half of 2009 compared with £377m for the same period last year.

Underlying profit before tax on an IFRS basis plummeted 86 per cent to £47m for H1 compared with £345m for the first half of 2008.

Standard Life’s UK life and pensions new business sales fell 24 per cent to £5.2bn down from £6.9bn last year.

Assets under administration on the Standard Life Wrap increased by 35 per cent to £2.3bn in the first half of 2009 compared to £1.7bn at year-end 2008. At June 30, there were 484 IFA firms using the platform and 23,000 customers with an average fund size of £101,000.

The firm’s financial groups directive capital surplus is £3.1bn slightly down from the £3.3bn figure reported at year-end 2008. Standard Life has also announced an interim dividend of 4.15p per share which represents a 2 per cent increase on last year.

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