Sesame has defended a £10.2m loss relating to last year’s turmoil within the network last year, which meant it had to set aside £31m for complaints liabilities.
This figure was down from £41m in 2013, but still dragged on turnover figures reported. The redress bill relates to a past business review into ‘unsuitable’ recommendations assessed to have been given in relation to pension transfers.
The wider Sesame Bankhall Group responded that it posted an operating loss for 2014 of £5m, an improvement from £19m in 2013. “This was a major improvement on the previous year’s figure and highlighted the progress being made,” added a spokesman.
“This is historical information relating to 2014, which has now been overtaken by more recent events. The important point for advisers is that following the outcome of its strategic review, SBG is now firmly focused on developing a profitable restructured business which acts in the best interests of professional financial advisers and their customers.”
The company added that the group is “playing to its strengths” by continuing to invest in its mortgage business, while bolstering support for wealth advisers through Bankhall.
In September last year, FTAdviser revealed a Sesame past business review into pension transfers may mean advisers have to pay thousands of pounds relating to cases where ‘unsuitable’ recommendations were assessed to have been given.
Also last year Sesame was fined £6m by the Financial Conduct Authority for failing to ensure the advice it gave was suitable on Keydata recommendations and over broader systems and controls weaknesses.
Aviva bought Sesame’s previous parent Friends Life earlier this year and offered £25m to cover liabilities faced by the network. Friends Life also promised a further £20m in the summer to fund the costs of past business reviews and restructuring of the business.
In March this year, Sesame announced it would no longer offer a network home for retail investment advisers, in a move it has blamed on an RDR-inspired “natural migration” towards direct authorisation that is providing a challenge to the “basic premise of the network model”.