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Standard Life sets aside £175m over non-advised annuity sales

Skeoch Keith Standard Life Investments

Standard Life has set aside £175m to cover the cost of redress as part of its review of non-advised annuity sales.

It emerged last year the provider is carrying out a review of all non-advised annuity sales from 2008 into whether customers were properly explained the option of taking out an enhanced annuity.

At the time the FCA said a small number of firms were in enforcement following a review of 1,200 non-advised sales at seven firms.

In October investment banking firm Jefferies estimated the cost of redress to Standard Life to be around £125m.

Standard Life’s full-year results, published today, show the actual figure to be higher at £175m.

The results say: “Non-operating items include a provision for non-advised annuity sales practices of £175m but take no account of a possible insurance recovery of up to £100m.”

Overall the company posted a pre-tax profit of £723m for 2016, up 9 per cent from £665m the previous year.

Assets under administration rose 16 per cent over the same period from £307.4bn to £357.1bn.

Standard Life’s UK pensions and savings division reports profits of £281m, down 3 per cent from £291m in 2015.

Standard Life Investments profits went from £342m to £383m, a rise of 12 per cent.

Retail assets are up 48 per cent from £42.6bn to £62.9bn, helped by the acquisition of Elevate which added £11.1bn in AUA when the deal completed last year.

Inflows onto the Standard Life Wrap went from £4.4bn to £4.1bn, though total assets are up 25 per cent over the year from £25.5bn to £31.9bn.

Standard Life chief executive Keith Skeoch says: “Standard Life continues to make good progress towards creating a world-class investment company. We have increased the pace of strategic delivery, against a backdrop of volatile investment markets, with growth in assets, profits, cash flows and returns to shareholders.

“Despite industry headwinds, we are benefiting from our strengthening global brand and strong long-term relationships with a well diversified range of clients and customers. The acquisition of Elevate has strengthened our leading position in the advised platform market.”



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There are 5 comments at the moment, we would love to hear your opinion too.

  1. I wonder how much they’ll put aside for their non-advised drawdown sales

    • All part of the one Review. Many customers who were sold standard annuity terms (from SL) could have done with Drawdown. For example, many didn’t really need an income – TFC was only objective. However, sales staff were managed / remunerated on annuity sales!!
      Selling Drawdown with a ‘Service Charge’ (trail commission) of 0.25% may come back to bite them. This was meant to give customers things like a review and access to ‘experts’. In reality, this didn’t happen. For the wise ones who opted not to pay the charge, they got the same service any way!!! You couldn’t make it up!!!

      • The trail on products pre-RDR was simply a means to take the full commission over a longer period instead of up front. It did not say anywhere that taking of trail was there to provide an ongoing service. It is only since RDR that the FSA/FCA dictated that if you take ongoing income you must provide ongoing service for it.

  2. “Non-operating items include a provision for non-advised annuity sales practices of £175m but take no account of a possible insurance recovery of up to £100m”
    I note there is a possible recovery of £100m. I am sure the insurance company will be very keen to understand how this mis-selling was able to happen for such a long period. Was the same person in charge during the period in question? Was it their direct influence to mis-sell to customers, in order to increase annuity sales (very profitable to SL when rates were comparatively poor) and thus line their own pockets in the shape of their bonus.
    From the recovery of £100m from the Sterling Fund to this. What insurer will want to keep providing cover?
    5 years from now………..step forward 1825’s indemnity provider…..hope they have £100m to donate to the cause.

  3. Did it not occur to the FSA as long ago as 2008 to issue a simple edict to all providers that their pre-vesting packs must highlight as clearly, as prominently and as unambiguously as possible the availability in the OM of a better annuity than the in-house one and that, to find one, it would be a good idea to seek out IFA?

    Perhaps it did and, if Standard Life ignored this edict, it deserves everything now coming its way. Then again, if such an edict was issued, did it not occur to the FSA to check Standard Life’s pre-vesting packs to ensure compliance? The cost of so doing would surely have been minuscule and the time it would have taken would have been just a few weeks. Or was the FSA, as usual, allocating its resources in other directions?

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