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Sesame makes £31m complaints provision

Sesame Bankhall Group has set aside £31m for customer redress following a review by parent company Friends Life.

Friends revealed the complaints provision in its half-year accounts this morning and added there is “considerable uncertainty” surrounding the results of its review.

Sesame was fined £6m by the FCA in June 2013 for failing to ensure investment advice was suitable and for failings in the systems and controls that governed the oversight of its appointed representatives.

Friends says costs arising from the latest complaints provision is not expected to have a “material adverse impact” for the parent company.

Friends says: “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.”


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. I have no doubt that this level of provision is a function of the way ‘claims’ are decided: manufactured during regulatory reviews or the creep of that ‘fair and reasonable’ Ombudsman, rather than being real claim on the basis of proper breaches of duty. And of course, it is also a function of Sesame now carrying the regulatory liabilities of numerous predecessor networks, some dating back to 1988.

    The FCA can let the matter fester – and one can imagine all sorts of scenarios where this will eventually crash and burn and the tab for the more realistic complaints will be picked up by the IFA community. Alternatively, it can accept that the regulatory regime itself is at the root of the issue here and take steps to exclude the FOS et al, allow Friends to realise some value and use the proceeds to meet the genuine claims.

  2. Sesame are not unusual, they have just been caught. Other large organisations have similar problems (poor records and little or no controls), its just the FCA have not turned over the stone.
    The FCA only have to ask for a list of your UCIS advice to find the stones. They don’t ask everyone because they are afraid of what they will find. They ask the small players only as the fall out can be managed. There is an elephant in the room.

  3. Derek Bradley ceo Panacea Adviser 6th August 2014 at 9:39 am

    This level of provision is alarming and Jonathan Purle makes some interesting observations.

    Part of the problem is a lack of longstop (1988 provision) and even more alarmingly, FOS actions. We are doing a survey at the moment, comparing adviser attitudes to the FOS to adviser views in 2011.

    It is very worrying when we see initial thoughts from this current survey showing that only 18% think adjudications are fair and that 73% of advisers have seen manufactured or false complaints made with a view to getting their hands on compensation. 71% think FOS awards have been made for events that have not happened

    Based on these two points alone, the provision would make sense. If it were not for the financial strength sitting behind SBG, this would be a provision shortly to land with the FSCS.

    Here is a link to our survey, closing soon. If you have not already done it, your thoughts would be appreciated

    Results will publish in September.

  4. As Friends Life are also shareholders in Tenet Group ( along with Standard Life Aegon and Aviva ) I wonder if they will be able to ” Cross Subsidise ” these losses ( as they do with withprofits funds etc., ? )
    With Standard Life claiming a 12 % increase in PRE TAX PROFITS . . . .it appears clear the SAVIOUR for insurance companies is the Paupers Penions – sold as ” Auto Enrolment “, but in REALITY are increases in Tax by increased National Insurance . . .by any other name. Forcinggpeople to invest in long term pension funds which may not be there as most insurance companies remain INSOLVENT ( eg Scottish Widows, currently owned by LloydsTSB . . .and its derivatives BAd Bank . . even Worse Bank . . . . ) – offer appalling service standards .. . . .Scottish widows, friends life etc., and their failures of management due to a Breach of Ethics . . . . .Breaches in Contracts . . .and their on going Fire Fighting . . . . . in their attempts to retain CONTROL. Are these companies Fit for Purpose ? Where is the FCA ? leading form the front in their failures to . . .order or control the Regulation in its many FORMS ? These horses have bolted . . . .the stable Door remains OPEN . . .and the reckless insurance companies remain OPEN FOR BUSINESS . . . on the basis of Fraudulent selling practices – the COVER UP’S . by provider and regulator . . . . . their leaving the swindles to the next set of management, the worrying about the consequences for later ( referred to as BUYING TIME ) . . .and negotiating their ” Special Fines ” with the FCA and their bosses . . . . to COVER UP DECEIT and FRAUD . . . and no one will take action. Peoples incomes , PEOPLES savings are being systematically destroyed by David Cameron and his Government . . . ..Regulation DOES NOT WORK . . .because it was NEVER MEANT TO WORK . . . .it is a Conservative Scam . . .on the greatest scale . . .against Her Majesty’s people . . . . . . . . !

  5. Given the amount spent on behavioural economics studies and training, the FCA/FOS are surprisingly behind the curve. The consumer is not always right nowadays. Indeed he has mutated into a greedy, thieving, lying, conniving charlatan who will do nothing to shift blame and to claim monies under false pretences. A consumer who is happy to rip-off the supermarket self check out or to hand back last night’s worn once outfit that “didn’t fit”.

    There are, of course a lot of very nice people too, and on occasion they are genuinely let down; sometimes by greedy, thieving, lying, conniving businesses. Some though are let down by nothing more than lady luck.

    Sadly, like the growing band of Elf and Safety zealots, the FCA/FOS fail to accept there is any such thing as luck, and also regard any complaining consumer as a paragon of virtue and/or “vulnerable” as the modern euphamism goes. The trouble is that as claims from the liars rises, the more resource is used up on them and the less there is for the genuine good consumers with valid claims. If five theiving shysters make claims against an IFA, it will probably wipe their own and their insured resources out, leaving the sixth onwards to the FSCS, where maximum claims are capped. The civil servants in these organisations, who often appear to have been indoctrinated with the institutional groupthink that all private businesses are the footmen of satan and therefore are always wrong regardless of circumstances, need to take a long hard look in the mirror and ask themselves whether they are being fair by acquiescing to consumers on the make, which then damages the outcomes of consumers who are not. Not that the FCA has ever actually stood for the “fairness” they market themselves to be.

  6. Everyone makes errors . The FCA changes the Rules so often to generate their Negligence claims – for their own reasons rather than any USEFUL purpose. Banks and Direct 2 customers Insurance companies look at how much they can ” Churn” or deceive/miss sell or mislead – and worry about the consequences later. Sesame would have an interest in looking after their clients – which is why they may been caught out – set aside provision – for any financial deficiencies. However, cutting corners form Compliance Departments – should not be copied form Banks or Insurance companies – or Corrupt firms. There is a requirement to conduct business – profitably – which The FCA has not yet been able to put in plaice ANY STRATEGY or PROPER FRAMEWORK – which might allow business to continue . Unfortunately, there are still some unethical firms – who seek to undermine the FCA – undermine CLIENTS – and who have not yet discovered the most suitable way to deal with clients is to Treat them with RESPECT – Deal Ethically – and Transparently . . . . . such a strategy should remove many unethical insurance companies . . . . .

  7. @Bryan – I loved your post!

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