Skipton Building Society’s advice businesses have made a combined £12m provision for customer redress following an investment advice past business review.
In February, Skipton revealed it would set aside £5.6m to cover both redress and commission rebates to investors for fund underperformance.
Some £3.3m of this related to funds under its “Monitored Informed Investing” proposition, whereby customers are offered a rebate on ongoing charges if a fund underperforms against its peers.
Skipton says the remaining £2.3m provision followed a past business review which focused on the documentation of investment advice at SFS and Pearson Jones, another of its advice subsidiaries.
This was a net provision, however, meaning it only set out the difference between the amount Skipton expects its professional indemnity insurer to pay out and the estimated size of the total complaints provision.
The full SFS accounts, published on Companies House earlier this month, reveal the firm has made a £9.1m provision relating to the investment advice review. Of the £9.1m, SFS estimates £7.8m will be covered by its PII.
A Skipton spokeswoman says the total provision across SFS and Pearson Jones is £12m. She says £2.5m of this relates to advice given by Pearson Jones, with the remaining £0.4m set aside for complaints which are not related to the past business review.
She says the “majority” of the £12m is covered by Skipton’s PI insurance and the firm expects total payouts to be below the provision made in its accounts.
Rowley Turton director Scott Gallacher says: “You would have hoped a company the size of Skipton would have watertight compliance procedures. The problem is these sort of organisations are run by salespeople rather than advisers.”