Making the front page first was the Falcon Group which won a year-long PI waiver from the FSA A total of 909 IFA firms obtained waivers that year.
By February, Aifa was in talks with the FSA, ABI, product providers and PI underwriters discussing the potential for an IFA-specific PI provider as the industry looked for ways to increase capacity. Later that month, well known IFA Nick Bamford, managing director of Informed Choice and then chairman of Sofa, found himself struggling to get cover.
IFA support services group SimplyBiz soon found it was struggling, stalling its plans to offer PI to members as part of its overall package. As the problem intensified, Aifa director general Paul Smee described the crisis as unparalleled. The need for a captive PI insurer for the sector had become imperative.
The LIA began pleading for the FSA to extend blanket PI cover to all firms with annual turnovers below £500,000 to help them make it through the crisis.
In April the FSA let IFAs with non-compliant cover off the hook, so they no longer had to write to clients and inform them of their status. At the same time, the first sole-trader received a waiver.
Despite the solutions forming on the horizon, Sussex IFA Marshall Williams & Co was one of those told by the FSA it must stop trading due to its failure to find cover for the £250,000 business, as reported by Money Marketing in May.
The light at the end of the tunnel did begin to grow stronger, however, and appearing like a rabbit out of a hat was Magian Mutual, becoming the first new entrant to the PI market since the crisis started escalating in 2002 and getting the FSA’s blessing in May.
But it was not only the PI crisis that stained the year. Prudential’s critical illness pipeline business scandal also creating uproar. The story broke in April, when the Pru raised premi¬ums and withdrew guarantees on new and pipeline critical illness business. IFAs were outraged. The salt in the wound was the fact that the Pru had pledged only a week before making the fateful decision that it would honour previous premium commitments on applications.
IFAs fought back, with Lifesearch leading the charge, looking into the possibility of a class action lawsuit with the fiasco culminating in an embarrassing compromise for the Pru, which offered compensation to IFAs to go towards rebroking costs.
The axe fell on Pru staff soon after as the insurer moved to rebuild its bridges, with director of product development Richard Field, director pensions and protection Richard Taylor and senior protection product manager Keith Bevan all exiting the firm.
Pru UK chief executive Mark Wood’s apology for the decision to IFAs later in the year at a Money Marketing Live conference did help salve IFA wounds.
Other events that shaped what was a busy and turbulent year included AMP’s decision to pack its bags and head back down under, demerging its business to create separate Australian and UK arms.
Meanwhile, the Treasury appointed former chairman of energy regulator of gem Callum McCarthy as the new FSA chairman, taking over from Howard Davies who gave up his post as chairman and chief executive of the FSA in September.
Davies had headed the regulator since its inception and spearheaded more change in the industry during his time there than many IFAs had seen in their entire working lives.
The year also marked the start of the John Tiner era, who took over as FSA chief executive. Tiner promised a shake-up when he took the helm and has not failed to deliver.
Other big issues that continued to tick over were discussion over the Sandler suite of price-capped products and the endless debate over depolarisation, while the FSA carried out its biggest-ever inquiry, looking into the split-cap fiasco. The Chancellor inaugurated the Miles review into long-term fixed rate mortgages. The lending industry was skeptical. The FSA relented a little and allowed past performance in fund advertising, admittedly with strict controls.
The collapse of Lamensdorf also repeatedly made headlines, as did events at RJ Temple including its purchase by the Lighthouse Group. The year also saw Royal Liver buy Park Row for£17m.
Inter-Alliance hit the front page in July when its shares plummeted by more than 77 per cent in two days after the release of a trading statement outlining that the board was looking to reduce the group’s costs, improve productivity and “consider all strategic opportunities”. The firm later received £15m funding to shore it up from corporate finance group Evolution.
With-profits bonuses continued to be savaged, leading Scottish Widows to downgrade its projection rates on with-profits endowment policies in May. Long-serving chief executive Mike Ross stepped down in September.
In the pension arena, March saw Invensys become the first employer to lock its final-salary members into its under-funded pension scheme, after Opra’s decision to allow schemes to defer transfers until new rules came in allowing lower valuations.
Adding intrigue to 2003 was would-be Standard Life carpetbagger David Stonebanks. The retired lecturer from Dorset had his attempts to force a demutualisation vote thwarted when the company rejected the 2000-demutualisation request forms he delivered to the insurer by shopping trolley, due to the wording of the resolution.
But the insult to injury came for him when Standard later revealed plans to hold a strategic review of its mutual status including considering demutualisation, a vote on which is to be put to policyholders in 2006.