Quilter has set aside £12m to cover redress payments to British Steel workers advised to transfer out of their defined benefit (DB) pensions scheme by Lighthouse Group, its annual results revealed.
Quilter bought Lighthouse Group in June last year bringing an additional 390 advisers to the firm’s growing adviser operation. However, an affinity deal between Lighthouse and the steelworkers’ union resulted in 300 DB transfers which are now being re-examined.
Quilter, which saw pre-tax profit for the group grow 3% to £182m up from £176m in 2018, said this morning (11 March) fairness to customers was its highest priority. Of the 300 transfers, about 80 were undertaken prior to June 2017 after which the transfer values of the pension scheme were fundamentally enhanced.
The results said: “Since the year-end we have been notified of around 30 complaints relating to advice provided by Lighthouse, all of which related to the pre-June 2017 period. “We are in the process of reviewing those complaints and have written directly to the customers involved.”
It added while Lighthouse had professional indemnity insurance cover in place, Quilter had taken a provision of £12m on a gross basis to cover potential costs.
“We have initiated a review of all cases advised by Lighthouse, prior to its acquisition by Quilter in June 2019, to assess the standard of advice given to British Steel pension scheme members and have actively engaged with the regulator.
“While this situation is obviously disappointing, our priority is to do the right thing for our customers,” the results said.
Elsewhere, the business said its replatforming project remained ‘mission-critical’ Its initial migration of c.8% of the total platform assets under administration represented the funds associated with 60 adviser firms and 25,000 customers.
It said in the period immediately after migration, operational activity has been in line with expectations and initial feedback from advisers using the new system has been positive.
The results said: “We will incorporate lessons learnt from this process into our plans and ensure the new platform is operating well and at scale, ahead of undertaking our final migration by the end of summer, with scheduling of this timed to reduce potential disruption to our customers and advisers. “Ensuring that assets are transferred from our existing platform onto the new platform on a high quality, low risk basis is mission-critical.”
The total costs of the project are expected to be around £185m. So far £136m had been spent by end-December 2019.
Broadening its advice business was also a success in 2019, the results said. It acquired Charles Derby Group in February 2019 which provided a UK-wide national advice firm.
The results said: “We will enhance the Lighthouse restricted proposition through access to Quilter Investors solutions which have been specifically designed to meet the needs of customers of advice businesses.
“In line with the trend in previous acquisitions, over time, we expect a number of the 250 Lighthouse independent financial advisers to convert to a restricted proposition based upon the ability of our propositions to meet their customers’ needs.”