Defined Benefit  

Quilter pays out £15mn to Lighthouse clients

Quilter pays out £15mn to Lighthouse clients

Quilter has paid out £15mn on claims made against Lighthouse relating to unsuitable defined benefit transfer advice.

Last year, Quilter increased its provision for these claims by £7mn, according to its full-year financial results published today (March 9). To date, provisions for claims stand at £29mn.

Quilter said the increase in provisions was predominantly due to “the identification of some instances of unsuitable defined benefit transfer advice being given by Lighthouse advisers beyond that relating to former British Steel Pension Scheme members, which may have caused customers to sustain losses”. 

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Of the £29mn put aside, £21mn relates to Lighthouse British Steel redress and the other £8mn relates to other schemes’ redress.

During 2021, Quilter said it paid out £4mn in redress on BSPS cases, and spent £2mn on professional fees. But as at February 28, 2022, Quilter told FTAdviser £15mn in redress payments had been made to Lighthouse clients.

The final costs of redress, Quilter said, will depend on the final number of cases where advice is found to be unsuitable and where customers have suffered losses.

It anticipates the Financial Conduct Authority’s ongoing skilled person review into such due schemes to conclude sometime this year, allowing it to reach a final redress figure. 

“We didn’t cause this issue, but we will resolve it and treat these clients as if they were ours at that time,” Paul Feeney, Quilter’s chief executive, told FTAdviser. “We are now writing those cheques. I think we are the first to be able to do it.”

Quilter bought Lighthouse in June 2019. A year later, the FCA begun an enforcement investigation against Lighthouse for defined benefit transfer advice linked to British Steel members.

The Financial Ombudsman Service said it had 33 open cases against Lighthouse Advisory Services. Whilst it couldn't give an exact breakdown of what the complaints are about, anecdotally it said it looks as if the majority of them are about pension advice.

Net flows up 166%

Elsewhere in Quilter’s results, the firm reported a 166 per cent uptick in net flows last year, from £1.5bn in 2020 to £4bn in 2021. It credited its new Quilter Investment Platform for the uptick, which finished migrating customers in February 2021. The platform alone recorded £3.5bn of net inflows.

Gross flows from independent financial advisers increased by 63 per cent. Feeney said Quilter’s focus will now be on growing its third-party IFA network, having shed 141 restricted advisers from its Quilter Financial Planning business.

It now has 1,623 in-house wealth planners, and works with around 6,000 third party advisers.

“We expect to return to growth in adviser numbers during 2022 as we complete the repositioning of our advice business,” Feeney said in the results.

“The pipeline of firms seeking to join our network remains good in a competitive market.”

Adjusted profit before tax increased by 28 per cent in 2021, to £138mn, from £108mn in 2021. The firm also lifted the full-year dividend by 22 per cent, to 5.6 pence.