Fidelity pot for DC redress grows to £21m

Fidelity pot for DC redress grows to £21m

Fidelity has set aside £21.9m to cover potential liabilities from a processing error in its defined contribution pension business.

Earlier this year the company announced it had set aside £3m to address the issue but in the six months since it has increased this contingency fund by £19m.

This has been revealed in the company's results for the 12 months to the end of June 2017.

In its results Fidelity said: "While the group continues to investigate the extent of the error and the number of impacted clients, the current provision represents the group's best estimate of the likely future redress at the balance sheet date.

"The group has undertaken significant analysis to understand the cohort of clients impacted but there remains a reasonable level of judgement in making the final calculations.

"The increase in the provision by £18.9m reflects the development of the investigation during the year and has largely been driven by an increase in the potential number of pension schemes assessed as being within the scope of this investigation."

Earlier this year Fidelity said the money was being set aside because of an administrative issue relating to the setting-up of a small percentage of its defined contribution client base and would involve correcting some information.

Fidelity said it expected most of this provision to be used and predicted that it would be paid out over the course of the next calendar year.

Despite this Fidelity increased its profits for the year, to £65.8m for the 12 months to the end of June 2017 compared to £30m for the previous year.

Total customer assets increased to £198bn, compared with £169.9bn for the year before.

Administrative expenses increased by 9 per cent to £716m, which Fidelity has said it because it is making "considerable" investment in its platform in order to grow its business.