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James Hay swings to £2.3m loss amid 'legacy' pension reviews

James Hay swings to £2.3m loss amid 'legacy' pension reviews

Platform and Sipp provider James Hay has swung to an operating loss of £2.3 million for 2017, down from a £5.2 million profit in 2016.

The report, from James Hay’s parent company IFG, attributed the loss due to a number of ‘legacy issues’ and redress set aside for reviews the group is undertaking. Overall IFG, which recorded a loss before tax of £400,000, said it has faced £8.8 million in 'exceptional costs' in 2017 because of 'legacy matters'. 

These legacy issues included legal fees relating to HMRC’s ongoing investigation into James Hay's exposure to the biofuel investment Elysian Fuels, along with pension administration and advice on historical pension transfers in the group’s advice arm Saunderson House.

The legal and remediation costs in total amounted to £5.4 million, including a £900,000 potential client remediation for the pension transfer review.

James Hay chief executive Alastair Conway told New Model Adviser®: 'What we looked to do last year was, rather than deal with each individual issue that came along or the market exposed, to take the opportunity to step back and go through particularly some of our older business, which was written when the type of clients we engaged with or the type of product was more complex, to ensure that we felt the foundation on which we were moving forward was solid.'

James Hay's adjusted operating profit, which excludes acquisition-related amortisation, exceptional items and discontinued operations, was £6.1 million, down from £7.1 million last year. 

The platform recorded total net flows of £3.4 billion with 5,836 new Sipp cases during 2017, much of which was due to asset flows from defined benefit (DB) schemes. 

The report stated: 'In 2017 a significant component of James Hay's new business was as a result of such movement, and we expect that this will continue, notwithstanding increased regulatory focus, as members of defined benefit schemes continue to transfer out into alternative pension arrangements.'

IFA Saunderson House ran an operating profit of £7.2 million, with an adjusted figure of £8.6 million, and recorded exceptional costs of £1.6 million due to the review and resolution of legacy matters. 

As announced last month the group has put the advice arm Saunderson House up for sale and the company said it is still ‘considering the potential disposal of Saunderson House’, if ‘appropriate value for shareholders can be achieved’.


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