Standard Life pays out £100m to cash fund investors

Standard Life will take a £100 million hit against its profits after bowing to pressure to compensate investors for losses in its Sterling Fund.

The Sterling fund lost 5% of its fund value last month, despite being a 'cash' fund, through holdings in asset-backed securities.

The insurer had previously said it would only remediate investors who put their money into the Sterling fund between 23 December and 13 January. This had caused outrage as investors compared the company’s stance with its decision to bail-out institutional investors when it restructured a money market fund last year.

But after pressure from som 90,000 investors and financial advisers, Standard Life said today that it would make immediate cash injection into the fund with payments for those customers who have left since the announcement of the loss in value in mid January.

Excluding the pre-tax charge of £100 million the insurer said that in its results announcement in March would still show its RoEV, a valuation method used by insurers, above guidance for the last three months of 2008.

In its statement this morning Standard Life said: ‘We have listened to feedback and the concerns of our customers and key business partners and have decided to put customers back in the position they would have been before the valuation adjustment on 14 January 2009’.

‘Some customers would not have expected the value of their units to fall by this extent in one day, based on the information we provided on the nature of the fund.’

The insurer will write to investors to let them know how they can make any additional complaints they may have.

Standard Life chief executive Sandy Crombie has apologised for the delay in responding to the problems.