UK financial services giant Quilter has set aside another £7m ($48m, €41m) for the potential redress on defined benefit (DB) pension transfer advice provided by its subsidiary Lighthouse to British Steel Pension Scheme (BSPS) members.
In its H1 2021 results, the wealth manager said the total is now £35m for the redress pot.
Quilter said in the London Stock Exchange statement on 11 August: “During the period, we have continued to work closely with the skilled person review investigating the Lighthouse DB to defined contribution transfers.
“Our focus remains on doing the right thing by any customers who were poorly advised, even though this advice predates our acquisition of Lighthouse. The skilled persons review has identified some instances of further unsuitable DB to DC advice given by Lighthouse advisers beyond that relating to British Steel Pension Scheme transfers.
“As a result of this, we have increased our provision by £7m to cover the potential for additional remediation together with the associated costs. We expect the skilled persons review to conclude in the first half of 2022.”
Prior to its acquisition in June 2019, Lighthouse advised around 300 BSPS members to undertake a DB transfer. Of this sum, approximately 80 were carried out prior to June 2017, after which the transfer values of the pension scheme were fundamentally enhanced.
In June 2020, Quilter confirmed that its advice subsidiary Lighthouse was being investigated by the UK financial watchdog over the legacy DB pension transfer cases.
Results
Quilter reported a 20% rise in adjusted profit before tax to £85m in the first half of 2021, compared to £71m in H1 2020.
Of the £85m, £29m came from Quilter International. The UK giant announced the sale of its international business to Utmost Group for £483m on 1 April 2021.
The deal received shareholder approval in June 2021, and the deal is expected to be complete on 31 December 2021.
Net client cash flow increased 127% to £2.5bn on the prior period (H1 2020: £1.1bn), while assets under management and administration was up to £126.6bn for H1 2021 from £107.4bn..
Gross sales came in at £7.7bn in for the first half of 2021, up from £5.4bn.
The firm’s results excluding Quilter International highlighted the size of the operation. Without Quilter International, adjusted profit before tax was £56m in H1 2021 from £47m.
Net client cash flow increased 133% to £2.1bn on the prior period (H1 2020: £0.9bn), as assets under management and administration was up to £104.8bn for H1 2021 from £88.3bn a year before.
Gross sales were £6.6bn without the international arm, compared to £4.6bn in Q1 2020.
‘UK-based strategic path’
Paul Feeney, chief executive of Quilter, said: “I am pleased with our interim results which demonstrate strong growth in flows across our business, with a material improvement from our new platform following our final migration of clients and advisers in February.
“This improving momentum sets us up well to achieve our medium-term target of 6% net flows from 2022 onwards. With the sale of Quilter International, our results demonstrate good early progress on our more focused, UK-based strategic path and gives a taste of what we know our business can deliver in the future.
“As well as making important progress on our strategic initiatives, we also delivered robust financial results, with further operating efficiency improvements from our optimisation initiatives.
“We are ahead of where we planned to be at this stage and are on track to meet our operating margin targets of 25% in 2023 and 30% by 2025. With the platform at the core of our business, we are well placed to deliver faster growth and we look forward to updating the market on our plans at our capital markets day on 3 November 2021.”
