Quilter’s professional indemnity insurers have paid the firm £15mn to cover Lighthouse's British Steel Pension Scheme cases as well as other defined benefit and contribution pension transfer cases, leaving the firm to pick up the remaining £12mn.
Lighthouse, the business Quilter bought in June 2019, has been under investigation by the Financial Conduct Authority since 2020 for DB transfer advice linked to BSPS members.
Quilter has paid out £18mn in claims for Lighthouse BSPS and other pension transfer claims to date, an increase on the £15mn it had paid out in March, including £2mn in professional fees.
It had set aside £21mn relating to Lighthouse British Steel redress earlier this year, with a further £8mn relating to other schemes’ redress relating to the Lighthouse business.
The overall provision for Lighthouse British Steel redress and other claims sits at £23mn, with this figure rising to £29mn including professional fees.
Subject to the FCA’s confirmation of whether any additional work is required, Quilter said in half-year results today (August 10), it anticipates the skilled person review will conclude before the end of this year.
PI insurance premiums are on the rise for advisers. This year, one IFA told FTAdviser he has seen a 38.7 per cent increase on his May 2021 renewal, showing his PI insurance costs have risen by a total 55.43 per cent in two years.
Principal of Echelon Wealthcare, Al Rush, said insurance companies will always try to subsidise big payout losses.
“Decent advice firms with no claims somehow have to make up the excess,” he explained. “Other companies have to make good the loss. PI premiums for other companies have to go up.
“Some of it will be made up through more onerous terms of the company in question which was paid out to, but other companies will indirectly pay for it too in the form of increased premiums.”