Aegon has revealed an additional £12m of costs relating to the ongoing redress programme for Scottish Equitable customers, taking the total figure associated with the action to £100m.
In December, ScotEq’s UK life and pension business was fined £2.8m by the FSA and ordered to pay customers £60m following significant admin failings.
Aegon UK’s third-quarter results, published last week, show a further £5m associated with the redress programme and £7m in expenses. It says further costs may occur in the fourth quarter.
The results reveal a 67 per cent fall year on year in earnings for the third quarter to £8m from £24m, mainly driven by lower fee income.
Earnings for life business fell by 22 per cent to £18m from £23m while pension business recorded a loss of £9m, which the firm says is a result of lower fee income, investment in new propositions and expenses relating to the redress.
Aegon’s distribution arms Origen and Positive Solutions made a combined loss of £1m in the third quarter, with a total loss of £4m for the year so far.
Aegon says it is close to its target of reducing costs by 25 per cent – a total of £80m – by the end of this year, with savings of £71m achieved so far.
The company has cut over 1,000 jobs, disposed of parts of the business and announced staff pension reforms with more restructuring expected in the final quarter.
Corporate Benefits consulting director Allan Maxwell says: “The fall in earnings is a cause for concern but the business is trying to turn things round and reduce costs, which has to be a positive move. The company could not sustain the way it was going before the restructure.”