InvestmentsMay 8 2018

Scottish Widows hits back at Standard Life Aberdeen

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Scottish Widows hits back at Standard Life Aberdeen

Scottish Widows has revealed it is "confident" it has the legal right to terminate its investment management agreement with Standard Life Aberdeen.

As FTAdviser reported this morning (8 May) Standard Life Aberdeen's investment arm Aberdeen Standard Investments is challenging the notion that it is a material competitor to Lloyds Banking Group, owner of Scottish Widows.

Standard Life Aberdeen argued Scottish Widows has no right to terminate the contract to manage £109bn of assets on behalf of Scottish Widows clients.

Scottish Widows announced the termination of the agreement in February, due to the merger of Aberdeen Asset Management and Standard Life Investments.

A representative of Scottish Widows said: "We note and are disappointed by the comments made by Standard Life Aberdeen, particularly in the light of our position as a major customer.

"Standard Life Aberdeen is a clear and material competitor of Scottish Widows and Lloyds Banking Group in the UK and to suggest otherwise is not credible.

"As a result, Scottish Widows and Lloyds Banking Group had the right to terminate the contracts with Standard Life Aberdeen and we acted accordingly by serving notice on 14 February.

"We are confident of our legal position and that our actions are in the best interests of our customers, and we are therefore surprised at the course of action pursued by Standard Life Aberdeen."

FTAdviser understands that three firms, Schroders, JP Morgan and BlackRock have been shortlisted by Scottish Widows to manage the money.

When Scottish Widows ditched Standard Life Aberdeen, the latter said the fees it received for managing the money accounted for 4.4 per cent of its total.

Jason Hollands, managing director for business development and communications at Tilney, said these contracts represent material revenues and so if they have had a robust legal opinion that the break clauses were not in fact breached by the merger, they are duty bound to their shareholders to assert their position as this will likely have a bearing on potential compensation for early termination.

He said: "Clearly Lloyds Bank and Scottish Widows have a different opinion on this and as the contracts are not in the public domain nor am I a lawyer it is difficult to say who is right or wrong but clearly the terms of a contract should be upheld."