CompaniesAug 26 2014

Sesame pledges not to pursue advisers over review

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Sesame has told FTAdviser it will not pursue advisers for either the costs of conducting, or any redress arising out of, a pension transfer review which contributed to a £19m loss recorded by the network in 2013.

A spokesperson for the firm said it has already publicly disclosed provisions set aside for covering the cost of the review, and that its group professional indemnity insurance will cover the costs of compensating consumers.

The spokesperson added: “That is a benefit of being in a network.”

According to a letter sent to affected Sesame advisers by the firm, it states the first phase of the review, which had been undertaken by Deloitte, has almost concluded. It added that parent company Friends Life is responsible for overseeing the review.

The letter revealed that both the conclusion of this part of the process and phase two, which is about to begin, will be completed by a separate independent firm, The Consulting Consortium.

It continued that advisers may be contacted by TCC in the coming weeks and this may involve requesting further information regarding the circumstances of any “sale”, as well as writing to customers to ascertain whether they want their case to be included in the review.

The letter said: “We have requested that TCC informs you of the outcome of our review at the appropriate time and would be grateful for your full cooperation with this matter.”

The news follows on from the revelations by FTAdviser last week that national firm Ashley Law is set to recover at least £1m from its advisers for its pension transfer review, which was also ordered by the regulator.

The firm is recovering the negotiated flat rate cost of £800 plus Vat for each case charged by the third party investigator and will also seek any compensation due, which under the terms of its agreement with the FCA, it will initially pay out.

Out of 1,000 pension transfer cases reviewed over four years, 250 are believed to have been found to be unsuitable and requiring redress to be paid. One adviser said his bill for 10 cases to be reviewed, of which four will be compensated, is approximately £20,000.

Sesame was ordered by the FCA in June 2013 to carry out a ‘risk-based past business review’ to identify customers who suffered a loss as a result of receiving “unsuitable advice” to switch their pension between 5 July 2010 and 21 September 2012.

In March, the advisory business posted a full year loss of £19m for 2013.

Sesame’s letter to advisers also gave an update to “outcome four” of its initial review phase, which covers the situation where a customer has switched into a pension where there would be a need for ongoing investment reviews, but this has “not been explained, offered or put in place”.

The letter says: “Currently there are two populations from phase one where client and/or firm contact may be made over the coming weeks by Sesame as follows:

• Where there is no review in place and an explanation for the need to review their funds is not detailed enough then outcome four has failed and a ‘call to action’ letter will be issued.

• Where the file states ongoing reviews have been put in place, we will initially request confirmation from you that reviews have taken place and to also provide evidence of these. This will then be reaffirmed with the client, where the original explanation for the need for reviews was not clearly explained, then an appropriate explanation will also be included.”

The Consulting Consortium declined to comment.