Scottish Widows faces new pension advice claims

Published on Saturday 27 March 2010 13:32

SCOTTISH Widows is set to face further claims over alleged mis-advising of pension fund clients despite the company winning a major court victory earlier this month.

• Scottish Widows headquarters in Edinburgh

After Lord Hodge found in favour of the life firm at the Court of Session in Edinburgh it was thought that other cases waiting in the wings might not proceed.

But Roger MacNicol of the Stirlingshire-based Actuarial Review Company (ARC) said similar cases were "very much still alive".

In the court case trustees of a pension scheme run on behalf of employees of Cheshire engineering firm WTL International had claimed Scottish Widows provided negligent advice in 1999. Lord Hodge ruled there was no professional negligence by Scottish Widows.

ARC claims Scottish Widows wrongly advised up to 200 pension schemes in 1999 and 2000, resulting in poor investment performance and an estimated loss of up to 300 million.

The Court of Session decision in favour of Scottish Widows had been disappointing, said MacNicol, but he said it would not adversely impact other claims he is pursuing. "We believe the reason the WTL claim failed was very specific to that case and was because an independent financial adviser had been heavily involved. That is not the case with other schemes we are dealing with, and although the principles involved are the same, there are different circumstances."

MacNicol said the WTL claim had not been a test case for others. "It just happened to be the first one ready to take to court," he said. His company was speaking to about 20 former Scottish Widows clients over possible claims. Two writs have been issued but MacNicol said he was unable to reveal which schemes they related to.

A spokeswoman for Scottish Widows said she understood the cases where writs had been issued had been on hold until the outcome of the WTL case. "We expect decisions will be made shortly by the companies on how they want to proceed."

In the WTL case Lord Hodge found Scottish Widows had committed no professional negligence in respect of actuarial advice provided in 1999 to the trustees of the pension scheme, which had about 100 members.

The case centred on an asset shift from a deferred annuity contract to a managed fund that subsequently lost value. The advice is said to have resulted in the scheme's investment performance suffering.

The scheme was closed in 2004 and it has been undergoing Pension Protection Fund assessment since July 2008.

Scottish Widows said: "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 could not find any fault in Mr Punter's assessment that the actuarial advice was within acceptable actuarial practice and noted Mr Punter as giving a convincing defence of the actuarial advice given to the trustees."