Within days it had issued its first public reprimand, criticising Property Equity & Life for failing to monitor a Manchester tied agent’s action and promised tough new rules on tied agents’ references. Meanwhile, the Unit Trust Association was looking at the viability 0 marketing its members’ products across Europe. This would mean transforming unit trusts into Open Ended Investment Companies.
Fimbra chairman Lord Elton, who resigned at December’s AGM, remained in his post until March. His swansong was a letter to John Redwood – then trade minister – warning that the European Community’s proposed capital adequacy minimum of £35,000 would put many small IFAs out of business. By October, a concession had been won allowing Fimbra A1 members to escape the requirement which was little comfort to the A2’s who made up 70 per cent of its membership.
John Major, then (briefly) Chancellor of the Exchequer increased maximum investment in Personal Equity Plans from £4,800 to £6,000 and introduced Tessas. In April Chase Manhattan bought a 4.9 per cent stake in the Levitt Group – the first of a string of deals to reduce chairman Roger Levitt’s own stake in the firm. L &G already held a 4.9 per cent share in Levitt and, in June 1990, General Accident bought a similar stake. Commercial Union followed suit in September. These deals trebled the paper value of Levitt Group from £50m to £150m in five months.
Philip Chappell of the Association of Investment Trusts became one of the first people to predict the death of the endowment policy. And in May, the industry lost Scottish Amicable chief executive Bill Proudfoot when he said he would step down due to ill health. He was succeeded by Roy Nicholson. By Christmas, Proudfoot was dead.
Fimbra was attacked in June over its handling of the collapse of Dunsdale Securities and in August Fimbra’s chief executive O’Brien stepped down. June also saw Prudential lose £50m through its estate agency chain and the closure of 175 of its property outlets.
In August, the Gulf war hit markets hard, with the average unit trust falling by about 14 per cent over the month. Meanwhile, Lautro clampdown on tied agents in October by ordering Colonial Mutual to cut links with about 25 per cent of its tied agents.
Allied Dunbar’s chairman Mark Weinberg, chief executive Mike Wilson and managing director Keith Carby left the firm only to resurface in November as head of what would become J Rothschild Assurance. And on November 14, Roger Levitt announced his resignation. His removal had come at the request of Fimbra.
November also saw John Major move into Number 10 and former NatWest man Godfrey Jillings take over from Ray O’Brien as chief executive of Fimbra. Jillings would be working with Fimbra chairman Gordon Downey, who had taken over from Lord Elton in March. The Levitt Group called in receivers after its shareholders refused to back a rescue plan. This followed its inability to meet Fimbra’s solvency requirements and the discovery of false invoices worth £21m. Levitt was later declared bankrupt and released on bail of £500,000.