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Windfall challenge begins in court

The long awaited pension review windfall test case, which will also affect

FSAVC and mortgage endowment compensation, finally started this week in the

High Court in London.

Over 43,000 pension review calculations could be slashed if professional

indemnity insurer Collegiate succeeds in the case.

This would represent about 9.6 per cent of cases outstanding, according to

an FSA statement given to the court.

The case is a challenge to PIA rules that say demutualisation benefits should

not be counted when assessing losses under a pension review.

Collegiate is pro

viding the main funding for the case brought by Needler Financial Services

against investor Ronald Taber.

Taber, whose loss was calculated at £26,000, received shares worth

£10,000 when Norwich Union demutualised in 1997.

Collegiate, which is paying both sides&#39 costs – believed to be around

£250,000 – is accusing product providers of getting a free ride by

refusing to contribute to the costs of the case when they will gain most

from a successful outcome.

Collegiate legal and claims director Martin Archer says: “Providers do not

feel the same pain that IFAs feel as compensation comes out of their

with-profits funds. And the providers do not want a war with the PIA.”

The case is continuing and a judgment is expected at the end of July.

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