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Equity-release plans cost West Brom £27m

West Bromwich Building Society last week finally admitted it has paid out nearly £27m in legal bills and compensation following its High Court battle with customers missold equity-release plans in 1980s and early 1990s.

The society has been left with the bill following inappropriate sales to pensioners by financial adviser Fisher Prew Smith. The economic turmoil in the late 1980s and early 1990s meant payouts from the Rainbow equity-release scheme became lower than the society&#39s interest charges, lumbering clients with spiralling debts.

It is understood that investments in the scheme would have needed to return 23 per cent a year just to cover the society&#39s mortgage costs.

West Brom resisted subsequent compensation claims, saying this was the adviser&#39s responsibility until it was defeated in the High Court in 1998 in an action brought by almost 200 customers and supported by the Birmingham Post.

Mr Justice Evans-Lombe ruled that the society was liable for the misleading advice given to clients by Fisher Prew Smith and ordered it to pay compensation, which has averaged £13,000-£14,000 a client.

Last week, West Brom tried to draw a line under the matter, saying the years of legal wrangling combined with compensation payouts had cost a total of £26.76m, almost double its profits last year.

The society said 190 claimants had accepted its offer of compensation and hoped the remaining outstanding claims would be settled quickly.


Scottish Life – Retirement Solutions – Group Stakeholder Pension Option

Tuesday, 13th February 2001.Type: Group stakeholder pension option.Minimum premium: £20.Minimum group size: 5.Minimum-maximum ages: 0-74.Fund links: Pensions managed, deposit, defensive managed, UK equity, UK ethical, UK mid-cap, European, American, Pacific, property, fixed interest, index linked, global managed, worldwide, security 100, security 98, Scottish Life/Schroder Hermes UK index tracker.Charges: Annual 0.45-1 per cent, transfer values 0.2-1 […]

Online service offers policy details

IFA network Positive Solutions is launching an online service for clients to monitor their own details and policies. The e-business system will provide individual integrated websites for its members and their clients. It will allow customers to access and track their policy data, including valuations of policies. The network already gives its member IFAs, which […]

Nicholas Goodison appointed chairman of annuity reform campaign

Nicholas Goodison has been appointed chairman of the Retirement Income Reform Campaign, the pressure group founded in 1999 to seek reform of the rules compelling pensioners to buy an annuity at 75. Goodison was chairman of the Stock Exchange from 1976 to 1988. He was also chairman of TSB Group from 1989 to 1995, becoming […]

Extra helping from LeggMason

LeggMason Investors is targeting individual savings account (Isa ) investors by making its extra income portfolio fund of funds available as an Isa. The fund will consist of an actively managed portfolio of UK unit trusts and open ended investment companies (Oeics). It aims to produce a gross yield of 5 per cent each year. […]


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