UK Money News
27th May 2008
Arc: Scottish Widows gave 'negligent advice' to pension schemes
Scottish Widows could be facing a compensation claim of up to £1 billion over claims it provided poor advice to company pension schemes.
Up to 100 schemes are named in a dossier filed by the independent consultancy the Actuarial Review Company (Arc), which has been sent to the Financial Services Authority.
It is claimed that up to £300 million was lost by the schemes after the insurance company advised them to switch from guaranteed annuity funds into a Scottish Widows managed fund with a high exposure to shares.
The dossier claims that this instruction, which has issued at the height of the stock market boom, constituted negligent advice.
Roger MacNicol, director of Arc, commented: "The switch advice was given by employees of Scottish Widows not by independent actuaries.
"As a result, the schemes are less well funded, less solvent, and require a higher contribution rate from employer and employee."
Arc is expected to launch its legal action in the High Court within a matter of days.
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