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Open Sesame soon to close?

Open Sesame soon to close?

The future of Sesame remains uncertain as its parent company Friends Life has published results that show profits up 38 per cent.

The results show Friends Life spent £25m in 2014 on a strategic review into the beleaguered network.

Colin Williams, managing director of workplace and intermediary business at Friends Life, declined to give a date for when the review would be complete.

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He said: “The strategic review is ongoing and we are spending a considerable amount of money and taking a lot of steps to de-risk the business.

“When we have completed the review you will know.”

He added that the upcoming merger with Aviva would not affect the review process, which has been ongoing since February 2013.

Friends Life’s results also said the firm had been in discussions with the FCA about Sesame and the options it was considering.

Aviva, which declined to comment on the future of Sesame, will ask its shareholders to ratify the £5.6bn takeover at a meeting in London on 26 March.

It has already admitted in a prospectus to its shareholders that Sesame represents a risk to the business.

Friends Life’s results show the firm had an operating profit before tax of £556m compared to £402m in 2013.

The firm’s annuity sales were down only 15 per cent, compared to the rest of the market which has experienced an average drop of 38 per cent.

Friends Life chief executive Andy Briggs said: “My belief is that the standalone future of Friends Life is attractive, but the opportunity to accelerate the Friends Life strategy through the combination with Aviva is even more attractive.

“The combination is expected to create the leading player in the UK life and pensions market, with even greater scale in the key markets that Friends Life already participates in.”

The FCA declined to comment on its involvement in the strategic review.

Background box

Last November Sesame was fined £1.5m after the FCA found it promoted its own commercial interests over those of its clients.

The FCA said the network’s “pay-to-play” scheme meant the range of products recommended to its clients under its restricted advice service was influenced by the amount of services Sesame had sold to product providers.

In 2013 there was speculation about a break-up of Sesame Bankhall Group, and Standard Life-owned Threesixty Services was among those that expressed an interest in buying its adviser support arm, after Friends Life employed Barclays Capital to review SBG.

Sesame was also fined £6m in June 2013 for failing to ensure the advice given to customers was suitable.