Towergate insurers on standby as broking group continues to pursue a claim for the mis-selling
Towergate could be in line for a £12m payout as it ‘continues to pursue’ its insurers for the multi-million pound bill paid out to its customers mis-sold financial products.
The mis-selling was done by one of its former subsidiaries, Towergate Financial, which gave poor pensions advice to customers - and Towergate has not given up hope it can offset some of the final bill with a chunky insurance payout.
Towergate Financial mis-sold enhanced transfer value (ETV) schemes, which are a mechanism for transferring pensions, and unregulated collective investment schemes (UCIS), which enable investors to pool together to invest in projects.
The mis-selling happened under previous management to the ones currently heading up the business.
In its first quarter note today, Towergate said: “Recoveries may be possible for ETV and UCIS, either from third parties or under the Group’s insurance arrangements, both of which the Group continues to pursue. The maximum recoverable amount under insurance arrangements is £12.0m, although the ultimate extent and timing of any recovery remains uncertain.”
Towergate has cautiously pencilled in a maximum customer compensation bill of between £45m and £65m into its business plan, although the final amount could be lower.
Redress payments to ex-customers are on hold until the end of an FCA consultation into the best way to calculate compensations.
The consultation is likely to end in the third quarter of this year and the compensation begin again at the start of next year.
It also emerged today in the first quarter notes that under the UCIS redress process, Towergate has also recovered an estimated £500,000 of illiquid assets held by claimants.