Broking group now expects ETV and UCIS redress payments, if any, to start in Q4
Towergate incurred a further £1.6m of exceptional regulatory costs in the second quarter this year as the FCA probes into the company continue.
This follows on from the £1.1m in exceptional regulatory costs the group paid in the first quarter in relation to the investigations.
Towergate’s FCA probes relate to possible poor financial advice and client money.
Towergate revealed last year that the FCA is investigating the advice that advisory unit Towergate Financial gave to clients on pension enhanced transfer value (ETV) schemes and unregulated collective investment schemes (UCIS).
The unit has now been sold, but any liability stemming from the advice given remains with Towergate.
ETVs are a mechanism to transfer workers out of company pension schemes, while UCIS are schemes that allow groups of investors to put their money into particular areas.
The broking group also revealed in 2013 that it had “misallocated” £15m of client money between November 2007 and January 2011.
Towergate said of the regulatory costs: “These items primarily represent costs incurred in relation to regulatory investigations into advice provided by TF on ETV and UCIS, client and insurer monies and a strengthening of the group’s control framework.”
Redress date move
Towergate has also moved the date when it expects to start paying customer redress, if any is required, to the fourth quarter at the earliest. The company initially expected to start making payments in the third quarter this year.
It started contacting customers about the matter in the first quarter, and it expects the customer contact to be phased over three years.
The company has maintained its estimate of the possible liability to the ETV/UCIS issue at between £65m and £85m, although the company stresses that this range is purely or the purpose of developing business plans and cashflow projections.
Although the group incurred a further £1.6m of regulatory costs in the second quarter on top of the £1.1m paid in the first quarter, Towergate has reported the total regulatory bill for the first half as £1.8m.
It offset the total against £790,000 of adjustments related to the group restructuring and the sale of Towergate Financial.