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' 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.