View more on these topics

Standard Life vows Elevate will be profitable in ‘next couple of years’

Paul Matthews Standard Life

Standard Life expects the Elevate platform to be profitable in “the next couple of years”, as its 2016 annual results statement reveals it paid £31m to acquire the platform from Axa.

The results documents reveal Standard Life expects the total cost of the acquisition to reach £100m.

Standard Life UK and Europe chief executive Paul Matthews told Money Marketing: “What we have said is this is a good platform with good people but it needs more investment over the next five years to make sure we can continue to grow the services it offers IFAs. We also need to develop our own wrap platform and because we use the same back office supplier there is more we can do in how we can do that.

“We don’t break down the cost, what are saying is between what we paid and what we will spend over the next two or three years, people should think about that actual acquisition cost of around £100m. We expect that to be a profitable business for us in the next couple of years.”

Matthews does not expect the cost to increase beyond £100m.

He says: “When we did the business case for our board as to our decision to acquire Elevate we put a number in of what we thought we would be spending to acquire it and what to invest in it. We have always had a figure of £100m from day one. We have not changed on that.”

The results statement reported the “bargain purchase gain” from the Elevate acquisition as £5m.

The statement says: “The bargain purchase gain recognised as a result of the Elevate acquisition has arisen primarily due to the requirement to fund near-term losses in the acquired business.”

It adds: “The amount of revenue contributed to the group’s consolidated income statement for the year ended 31 December 2016 from the acquired Elevate entity was £6m, with a reduction in profit after tax of £1m.”

The results statement also revealed 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.

Matthews says the provision will cover potential redress and the cost of running the review.

He says Standard Life does not yet know how many customers have been impacted.

Matthews says: “For some customers we may not have asked the full range of questions. We have to make sure we do a review of those customers to find out which ones we did not ask those questions to and then ascertain would they or would they not have been entitled to an enhanced annuity. We have put the cost of that in because we have got to set a system up to review all of those customers.

“We have made a provision based on the range of customers we think may or may not be impacted and then we have used the FCA guidelines on what they think a typical amount will be and they have given some ranges in that and then we have come up with a range of figures that given people an indication.”

Standard Life expects the majority of cases will be settled by the end of 2018.

Recommended

Holding-Hands-Comfort-Embrace-Soothe-Care-700.jpg
4

Standard Life urges IFAs to manage clients’ DB transfer expectations

Standard Life is urging advisers to manage client expectations that defined benefit transfer values do not increase and decrease in line with equity markets. Standard Life financial planning propositions head Alastair Black says helping clients understand how transfer values behave is increasing in importance as DB transfers become a more mainstream part of advisers’s businesses. […]

Paul Matthews Standard Life
1

Standard Life UK chief Matthews to exit after 28 years

Paul Matthews, Standard Life’s chief executive of UK and Europe, is to retire from the firm after 28 years. Matthews, who joined the firm in 1989 in a distribution role, will step down in March and retire in August. Barry O’Dwyer, currently chief executive at Standard Life Assurance, will replace Matthews on the board as […]

Guide

Guide: reporting to the Pensions Regulator — what and when?

Johnson Fleming has published a step-by-step guide demonstrating the importance of record keeping and reporting, and how it can ensure you operate a successful scheme. The guide takes you through some key questions you need to ask and identifies the information you need to obtain. The topics include: why you need to keep records and the benefits of doing this; registering your scheme; what information you need to record to ensure you meet the Pensions Regulator’s requirements; and what items need to be recorded and when.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment