Friends Provident says it is not concerned about Sesame’s future liabilities despite the uncertainty over the figure reported by the network last summer.
In Sesame’s last full accounts for the year ending May 31, 2006, it projected its existing and future endowment complaint liabilities at 19.8m, up from 10.6m in 2005. But the firm admitted there is uncertainty over the figure due to a lack of records of policies sold.
However, Friends Provident marketing and UK distribution managing director Simon Clamp says: “Sesame has had a number of issues with regulatory reviews in the past, as has every other IFA firm. It is a market issue, not a Sesame issue. There have been recent reviews by the FSA and a number of these have been completed now. We would take on any responsibility for future liabilities.”
Tenet Group finance director Peter Laing says the fact that Tenet did not have to take on BIA’s liabilities when it acquired the firm was key to the deal being completed.
He says : “Doing deals like this can be extremely difficult, particularly when trying to quantify their calculations for potential compensation payments and with the problems Sesame noted in its last set of accounts. With BIA, we were able to not take these liabilities, which was a blessing.”
Burns-Anderson chief executive Mike Hughes says Friends has little choice in meeting Sesame’s liabilities.
He says: “The reputational damage that would have been caused if they forced the liability on to the Financial Services Compensation Scheme would have been immense.”