Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/new-model-adviser/article/a532064
Standard Life sues insurers for £100m over Sterling losses
by Daniel Grote on Oct 13, 2011 at 08:01
Standard Life is suing 11 insurers for £100 million, arguing their policies should have covered the losses it incurred on asset-backed securities held by its Sterling fund.
The Edinburgh-based provider has filed court papers demanding professional indemnity insurers cover the £100 million the provider injected into the pension fund in 2009 after it was hit by losses, according to Bloomberg.
The fund lost 5% of its value in early 2009 due to its holdings in asset-backed securities, despite being marketed as a 'cash' fund. The losses sparked outrage among advisers and investors, who said marketing material had been misleading.
Standard bowed to pressure by injecting cash into the fund, and last year was fined £2.45 million by the Financial Services Authority, which said it had misled investors.
Former Standard Life chief executive Sandy Crombie (pictured) admitted in court yesterday marketing literature for the fund had been 'hopelessly inadequate'.
A Standard Life spokesman said: 'Standard Life is pursuing a claim through the Commercial Court in London against its professional indemnity insurers. This relates to the decision by Standard Life to make a payment of circa £100 million into the pension Sterling fund in February 2009, something the insurers have refused to indemnify. We are unable to comment further while the proceedings are on going.'
Markets
News sponsored by:
Today's top headlines
More about this article:
More from us
- Standard Life: 'no heads are going to roll' over Sterling fine
- FSA fines Standard Life £2.45m over Pension Sterling Fund failings
- Standard Life invites compensation requests from Sterling customers
- Standard Sterling compensation cheered but some advisers left smarting
- Has Standard Life done enough to compensate Sterling investors?
- Standard Life pays out £100m to cash fund investors
- Standard won't repeat institutional bailout for Sterling fund
12 comments so far. Why not have your say?
You must be joking
Oct 13, 2011 at 08:26
Marketing literature was 'hopelessly inadequate' because...?
It's amazing how it's always someone else's fault!
report thisClarity
Oct 13, 2011 at 09:07
Yes, I have to agree with 'You must be joking'. Any Marketing investment literature is only as good as the information it gets from the investment experts.
report thisFed up with the FSA and Sants
Oct 13, 2011 at 09:07
So the marketing was wrong, and they expected their insurer to pick up the bill?
report thisJohn Borgars
Oct 13, 2011 at 09:15
@ Clarity
"Up to a point, Lord Copper"
Marketing literature *can* only be as good as the information it gets from the investment experts, but it can be a whole lot worse if someone decides to leave out bits of information. In this case the fuss was about what the marketing literature didn't tell people.
report thisClarity
Oct 13, 2011 at 09:21
I absolutely agree. Which is why the investment experts should always sign off final copies of any literature, so they responsibility for the accuracy of the techncal investment content.
report thisJohn Borgars
Oct 13, 2011 at 09:36
@ Clarity
"If only ..."
report thisDavid V Henderson
Oct 13, 2011 at 09:41
How big do you think SL's compliance department is? And the people running the fund....I suppose reading a 4 page brochure is just way too onerous a task for them. Nothing short of bizarre. The PI insurers will have a clause in the contract saying they will not pay out if you act like complete buffoons.
report thisMr Ed
Oct 13, 2011 at 10:12
This would be an example of the "innovative" product developemt which so exemplifies Standard... or thus reads the last Cazalet report.
This will get laughed out of court; all it's serving to achieve is to put Standard's buffoonery back to the top of the headlines.
report thisAnitaki
Oct 13, 2011 at 10:53
Hindsight is the most accurate form of vision. If only they'd gone to Specsavers, - perhaps they would have read and better understood the indemnity policies THEY took out.
Just like a client to make a complaint. "I didn't understand the product. I've lost £100 million. l want compensation"
report thisJulian Stevens
Oct 13, 2011 at 11:15
I suppose the crunch factor will be whether or not Standard Life's PII policy includes a clause absolving the insurers from liability if losses are incurred as a result of the insured entity marketing a product or fund on the basis of misleading promotional and thetrefore non-compliant literature. One has to wonder why Standard Life didn't take a good analytical look at just what was under the bonnet of this particular fund and properly reflect in its promotional literature the precise nature of what was found.
report thisl'ifa passeport en provenance de France
Oct 13, 2011 at 11:15
Warning!!!! when the euro explodes?????
report thisChristopher Petrie
Oct 13, 2011 at 18:49
My father had to take SL to court to get redress; at the time they defended their literature! It would have saved a lot of time and trouble had they admitted then what they are saying now.
report thisleave a comment
Please sign in here or register here to comment. It is free to register and only takes a minute or two.