Friends’ 2013 results revealed a £19m loss at SBG. It included a £6m fine handed down from the FCA as well as costs of a voluntary review of past business.
The network’s parent also set aside an undisclosed provision to cover ongoing past business reviews.
Cowan says in a letter of support to SBG, Friends had set aside £35m to cover costs. Of the £35m, the network exhausted £4m in H1 2014, leaving the £31m provision revealed this morning in Friends’ half year results.
Speaking to Money Marketing, Cowan says: ”Friends had a £35m provision against past business reviews and administration support. There has been capital support from Friends every year since they have owned it.
“We have used £4m of that in the first half of the year. Therefore the figure has gone down from £35m to £31m.”
Cowan says the majority of the past business reviews have focused on pension transfer advice. He adds the business is carrying out the reviews in order to settle cases of poor advice early.
Of the £4m provision used to date, he says: ”It has been used against settling past business reviews. It is compensation from our own past business reviews and assessment of cases where people have been poorly advised.”
He adds the past business reviews and tightening of controls are designed to get the business on a stable footing.
“We have done a lot of work on a project to improve the quality of the business and we are catching cases early where there has been poor advice and we want to put the customer back where they ought to be,” he says. “We are on a journey to clean this business up and get it into good shape.”
Cowan says some of the cost of making payments to clients may be recoverable from PI cover or individual representatives.
In its half-year results this morning Friends said: “The company has given a letter of support to SBG to assist them in meeting their liabilities as they fall due. A number of business reviews are currently being undertaken in these companies and provisions of £31m have been included in respect of customer redress.
“There is considerable uncertainty surrounding the outcome of these reviews, the number of future complaints and the associated costs for dealing with redress and complaint administration activities.”
It did not give any update on the ownership of SBG or a possible sale of the business.