STM Group has set aside £21.4m to deal with possible similar cases after the recent Court of Appeal ruling over the Adam's vs Carey (Options) case.
STM Group, the parent company of Options Pensions , formerly known as Carey Pensions, said in its full year results today (June 8) that although the case would not have a financial impact on the business, as it has "significant" professional indemnity protection, it has made the provision for similar cases.
STM chief executive Alan Kentish said: "The UK pension market remains in a position of uncertainty as to the extent of the duties of SIPP providers. Disappointingly, in April 2022 the Supreme Court refused Carey (Options) permission to appeal on the Adams case bringing the long-standing case relating to Mr Adams SIPP investment in 2012 to a close.
"This decision has no direct impact on STM financially due to its ability to recover under the professional indemnity insurance in place at the time, but it has meant the business has made a provision for similar fact cases. In consultation with its professional advisers, its auditors and professional indemnity insurers, the business has agreed a balance sheet provision of £21.4 million, with a corresponding recovery from the professional indemnity insurers on the asset side of the balance sheet.
"The Adams case is very specific to the actions of what an unregulated introducer may or may not do. There remains uncertainty in the industry, such uncertainty is unhealthy for all stakeholders, including consumers, and has resulted in increased costs such as professional indemnity insurance which are invariably passed on to the pension member. Naturally, STM as well as the pension industry, would welcome further clarity in this area."
Kentish further said "with regret" that Nicole Coll had decided to step down from her role as CFO.
"Since joining STM, she has significantly contributed to the strategy and development of our optimised operating model. However, she has decided to focus on her non-executive opportunities at this time. Nicole is committed to ensuring an orderly handover process to the new incumbent over the coming months and I am grateful that she was fully engaged in seeing the audit through to completion. The board wish her well in her future endeavours and have commenced the search process for a new CFO.
"We believe that we are well positioned to take advantage of all the hard work and initiatives that we have undertaken in the past few years in addition, to a more efficient centralised operating model. This is expected to increase our operating margins, so that we will be more comparable to our peers but will potentially require some additional resources in the short-term."
Key highlights in the results were:
- Recurring revenues remain predictable and a corner stone of the business representing 91% of reported revenues
- Strategic focus on core activities of pension administration and life assurance leading to disposal of the CTS businesses
- Growth in the UK proposition as now a key jurisdictional focus following integration of UK acquisitions
- Centralisation of the business development function to focus on driving increased "top line" growth
- Implementation of a harmonised IT operating platform largely completed and a commitment to increased investment in Group-wide systems to support central functions
- Updated to a "hybrid" working environment to keep our colleagues safe and to maximise flexibility and efficiencies regardless of physical location
- Q1 2022 Launch of Australian superannuation solution for expatriates