Lighthouse says while its complaint provision has increased markedly, the costs will be covered through professional indemnity insurance and excess payments from advisers. It expects the maximum cost to the Group to be £247,000.
The network says it provides in full for complaints where there is a 50 per cent or greater likelihood of redress.
Finance director Peter Smith says: “All bar the insurance excess would be picked up by the PI insurer and a relatively small amount, depending on the type of business, would be charged to the adviser.”
Smith says the increase in provision, from £133,000 to £3.18m, reflects the current economic crisis.
He says: “What you have got to look at is the economic backdrop that we have had over the last 18 months. In times of plenty people do not typically complain about their investments. If markets fall people generally look for someone else to blame and typically that comes back to the distributor.”
Lighthouse Group has today revealed pre-tax profits of £93,000 for 2009, compared to losses of £8,494,000 the previous year. The results show earnings before interest, tax and depreciation nearly doubling, from £553,000 to £1.1m.
Executive chairman David Hickey said while Lighthouse does not have an estimate of the total cost of the RDR in the lead up to 2012, he said it is unlikely to be significant.
Hickey says: “We are expecting it to bring some dislocation and some cost, but we are not expecting it to be dramatic numbers in the context of the Lighthouse Group.
“There is more expense to come in term of IT connectivity and systems, and while we expect to spend more on RDR over the next three years, there will be no drama involved.”