Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

RDR and PI costs scupper RSM Tenon's turnaround

RDR and PI costs scupper RSM Tenon's turnaround

The retail distribution review (RDR) and professional indemnity (PI) insurance costs have hit RSM Tenon hard, contributing to the firm’s £10 million loss for the second half of 2012.

RSM enjoyed an improved set of results after its well-documented difficulties with its loss for the last six months of 2012 year falling from £70 million in the second half of 2011, to just £10 million. Earnings also improved to £1.5 million compared to a loss of £8.2 million in the equivalent period in 2011.

However, revenues at the advisory and accountancy  firm were down, which Tenon blamed on lower business wins in its tax, audit and advisory divisions ‘in part due to the impact of the RDR'.

The company has also had to set aside £1.9 million related to PI expenses for its financial management business.

The results for the second half of 2012 also revealed Tenon was in an ongoing dispute with its PI providers over paying redress to consumers as part of an agreement it made with the Financial Services Authority (FSA) in 2010.

In February 2010 the FSA fined Tenon £700,000 for flaws with its advice on Lehman-backed structured products and ordered it to pay redress to consumers who had been mis-advised.

Tenon said some of its costs related to the FSA settlement were ‘indemnifiable, but that there has been a dispute between the insurers on the programme as to how they should share the indemnity costs’.

It said: ‘The group has sought to recover some of the costs incurred in undertaking the remedial actions required by the FSA Settlement Agreement, including the whole of the redress payments required to be made to investors from insurers subscribing to its professional indemnity programme.

‘A dispute arose between the group and its insurers in the previous financial year as to the extent to which the sums claimed are covered under the programme, and insurers disagree between themselves as to how their liability for those sums should be shared.’

‘These disputes were referred to arbitration and the case was heard between 28 January and 1 February 2013 with the arbitration considering all the costs which have been claimed by the Group under the professional indemnity programme.  The decision of the arbitrator had not been delivered at the date of this announcement.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Where A-rated Pattullo is finding the best bond opportunities

Where A-rated Pattullo is finding the best bond opportunities

Henderson Global Investors head of retail fixed income explains how he is managing his fund against the surprise current monetary policy divergence.

1 Comment Play Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Our much anticpated new series is here! We hand a black cab driver a tenner and grill the manager of the 125-year Merchants trust until the meter runs out.    

Play Europe bulls, a retail boost and why a little inequality can be a good thing

Europe bulls, a retail boost and why a little inequality can be a good thing

This week’s Investment Pulse looks at whether investors should be bullish on Europe, the surprise rise in UK retail sales and if a little inequality is a good thing.

Your Business: Cover Star Club

Profile: meet the duo at the heart of Hargreave Hale's succession plan

Profile: meet the duo at the heart of Hargreave Hale's succession plan

For the first time in the company's history a non-Hargreave is now at the head of the north west broker and asset manager

Wealth Manager on Twitter