Scottish Widows quashes £600m court threat

Published on Saturday 20 March 2010 12:43

LLOYDS Banking Group-owned Scottish Widows has won a significant legal victory over a claim that it gave negligent advice to a company pension scheme in 1999. The Court of Session ruling shuts the door on a raft of similar claims coming forward, which could have resulted in the pension provider paying out as much as £600 million.

Trustees of a company pension scheme run on behalf of about 100 employees of WTL International, an engineering firm based in Macclesfield, Cheshire, claimed Scottish Widows, the scheme's actuary, provided negligent advice. At the Court of Session in Edinburgh last week, Lord Hodge found in favour of Scottish Widows, ruling that there was no professional negligence by Scottish Widows in 1999.

WTL's compensation claim was only for 3m, but it was feared advice given by Scottish Widows to up to 200 other pension schemes could have paved the way for further claims.

The case centred on a claim of negligence in relation to a switch of assets from a deferred annuity contract to a managed fund.

The case was heard in the latter half of 2009. Scottish Widows has always defended its actions. The actuarial advice provided to the trustees by Scottish Widows in 1999 was supported by an expert witness, Jonathan Punter of Punter Southall. Lord Hodge said he could not find any fault in Punter's assessment, that the actuarial advice was within acceptable actuarial practice, and said Punter provided a convincing defence of the actuarial advice given to the trustees.

Edinburgh-based Brodies represented the trustees.