Your IndustryMay 11 2018

Cofunds complications and PI problems: week in news

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Cofunds complications and PI problems: week in news

This week a report recommended taxing pensioners to give millennials £10,000 each to help them onto the housing ladder. Well, that or they can use it to buy several tonnes of avocado.

Something that will not cost you £10,000 is catching up on what has been happening this week. It is time for the week in news.

1) Deja vu all over again

What is it about massive technology projects that makes them destined to go wrong in some way?

Just a few months after reassuring us that its upgrade of the Cofunds platform would not descend into the sort of debacles that had blighted Aviva, Aegon has been facing its own problems.

The provider completed the technology upgrade of Cofunds' retail book of customers this week, with more than 400,000 users and £37bn of assets moved to the Aegon Platform over the Bank Holiday.

But since then Aegon has acknowledged teething problems with its new platform but added most of the services are working properly - though some advisers were struggling to activate their account, leading to high levels of demand on Aegon's contact centre as advisers call in for support.

It is a good thing there aren't other companies going through replatforming processes - Hello, Old Mutual Wealth. Meanwhile Standard Life has revealed plans to upgrade its existing two platforms. Hopefully not here we go again?

2) Handbags at dawn

Who says customers - or at least their assets - aren't valued? Standard Life Aberdeen has formally challenged the right of Scottish Widows to pull £109bn of assets from the company.

Scottish Widows informed Aberdeen Standard Investments in February that it was withdrawing the assets because the merger between Aberdeen and Standard Life turned the company into a competitor to Scottish Widows.

But Standard Life Aberdeen said it was challenging the right of Scottish Widows to terminate its investment management agreement as its investment arm was not a material competitor.

Scottish Widows responded by saying it was "confident" it had the legal right to terminate its investment management agreement with Standard Life Aberdeen.

All of which leaves the savers who actually own the assets stuck in the middle between two bickering companies.

3) Making a Jes of it

Is there a more epic fail than Jes Staley's attempt to identify a whistleblower at the bank in 2016?

After being investigated by the Financial Conduct Authority, the chief executive of Barclays has now found himself fined £642,430 after he tried to find out who had written a letter which contained various allegations, some of which concerned Mr Staley himself.

In addition to the fine, Barclays has been subjected to special requirements which mean it must report annually on how it handles whistleblowing, with personal attestations from those senior managers responsible for the relevant systems and controls.

The regulator found Mr Staley's actions to be a breach of the requirement to act with due skill, care and diligence but not a breach of the requirement to act with integrity.

If this article came with sound effects, we would be playing the sad trombone music at this point.

4) Taking the PI

Planned rules designed to cut advisers' compensation bill by making it easier to bring financial claims against insolvent advice firms could be undermined by professional indemnity insurance clauses, experts have warned this week.

The FCA plans to force advisers' professional indemnity insurers to allow claims against a defaulted firm's insurance over concerns some insurers are using exclusions that mean the Financial Services Compensation Scheme (FSCS) is unable to bring a claim on the policy.

But Jonathan Corman, a partner at Fenchurch Law who specialises in insurance disputes, said such insolvency clauses are mainly used by a small group of already high-charging professional indemnity firms that target more risky advisers, businesses that would otherwise struggle to find cover at all.

5) Poorly advised

A judge has ordered Phones4U founder John Caudwell to pay £471,000 to his former financial adviser.

The billionaire entrepreneur, who sold his mobile phone company for £1.5bn in 2006, was sued by Nathalie Dauriac, the former chief executive of wealth management company Signia Wealth.

The High Court case focused on her allegations Mr Caudwell orchestrated a campaign to oust her from Signia and to expropriate shares at a low value.

While the High Court dismissed a number of her claims against Mr Caudwell, it told him to pay her £471,000 for the value of her shares allocated by Signia.

Mr Caudwell denied this and said Ms Dauriac was suspended in late 2014 after an investigation into her work expenses, with the probe finding claims for a flight to Málaga for a friend’s birthday and a birthday cake for her ex-husband.

Mr Justice Smith that when it came to some of Ms Dauriac's expense claims there was "quite simply, no explanation consistent with honesty" and he was sure she deliberately made claims she knew were not proper.

As if often the case with legal disputes, no one comes out of this tale particularly well.