Standard Life Sterling Fund

sdooley

difficult question

lots of US cash funds (they call them money market funds) had this problem in the weeks after Lehman went under, they had deposits which were underwritten by Lehman

you could equally say there is a risk associated with cash funds holding money on deposit with a range of banks

if two or three big american banks had gone the way of lehmans then we could have seen bigger drops than 5% on some UK cash funds, even if funds were held 100% in cash in the sense most people would understand it (bank call deposits, overnight bank lending and short dated commercial paper)

diversification is good, not telling your customers what you are doing is inexcusable

louisrossini

Although a lot of forum members may have seen this article in today's Guardian, this article by Patrick Collinson, an expert commentator, appears to offer great encouragement, concluding that the Financial Service Authority must find in our favour, based on the evidence he has seen.

The question now is whether we get together to form a joint approach to the FSA as well as writing individual letters claiming compensation to Standard Life and thereafter to the FSA.

What is the feeling out there for setting up some kind of structure to pull our individual cases together, hopefully including some of the people who have contributed to this growing topic with good knowledge of the investment/financial sector?

The article:
http://www.guardian.co.uk/money/2009/jan/24/investmentfunds-moneyinvestments

Myrmidon_J

sdooley wrote: »

Lots of US cash funds (they call them money market funds) had this problem in the weeks after Lehman went under, they had deposits which were underwritten by Lehman.

The Standard Life Sterling fund also had exposure to Lehman Brothers - this resulted in a small drop in the value of the fund (0.50%) in September 2008.

RoxFox100

In 2007 Std Life {LC put aside a provision described as follows:-

"A provision of £10m has been set up in respect of a guarantee to an associate for one cash fund to maintain the pricing structure for investors in the fund given current liquidity conditions. The investments backing this fund are principally AAA rated, and accordingly could, if necessary, be taken on balance sheet without a deterioration in the overall credit quality of the Group’s investments. "

see
http://ukgroup.standardlife.com/content/news/new_articles/2008/2007_preliminary_results.xml for more details

So this has happened before and on that occasion Std Life stepped into the breach to prevent investors losing out. The writing was on the wall for this fund but they carried on investing in the toxic stuff all the same = gross incompetence.

Moreover they continued to suck in new investors into an illiquid fund under the banner that it was a "cash" fund when it was infected with toxic sludge.

the information I received clearly states that the fund is wholy invested in cash

MONTYMAX

The mortgage-backed securities that have damaged the fund's value are not "short-dated money market instruments" and their tenuous defence is therefore flawed. I see they still hold Lanark Master Issuer which matures in 2032 and Titan Europe which matures in 2017. I will be pursuing Standard Life to the bitter end on this one. I have successfully fought an endowment misselling claim over many years and found that the small claims court is very effective. Easy to use on line and cheap too. I've only just found out about all this and I will be kicking it all off tomorrow - starting with a rapid transfer from this fund into their true cash fund which I have also just discovered has existed since last September!

wonderman

RoxFox100 wrote: »

In 2007 Std Life {LC put aside a provision described as follows:-

"A provision of £10m has been set up in respect of a guarantee to an associate for one cash fund to maintain the pricing structure for investors in the fund given current liquidity conditions. The investments backing this fund are principally AAA rated, and accordingly could, if necessary, be taken on balance sheet without a deterioration in the overall credit quality of the Group’s investments. "

see
http://ukgroup.standardlife.com/content/news/new_articles/2008/2007_preliminary_results.xml for more details

So this has happened before and on that occasion Std Life stepped into the breach to prevent investors losing out. The writing was on the wall for this fund but they carried on investing in the toxic stuff all the same = gross incompetence.

Moreover they continued to suck in new investors into an illiquid fund under the banner that it was a "cash" fund when it was infected with toxic sludge.

the information I received clearly states that the fund is wholy invested in cash

Gross incompetence sums it up nicely.

Myrmidon_J

Standard's pension sterling fund invested more in sub-prime than cash

Despite being promoted as a home for investors’ money “when the short-term outlook for equities, fixed-interest securities and property is uncertain”, the fund has 13 per cent invested in “non-conforming residential mortgage-backed securities”, while only 12 per cent in cash.

...


The firm has agreed to remediate people who invested between December 23 and January 13 but compliance consultant Adam Samuel believes far more people have grounds for compensation.

He says: "By mid-March 2008, mortgage-backed securities were known to be a problematic asset class - Bear Stearns had already fallen and Lehmans was wobbling. In addition the market for such securities was known to have dried up by Northern Rock's run in September 2007. But in literature dated March 16 2008 and even the letter sent to investors last week, there is no reference to mortgage-backed securities.

"One would have expected that in both documents, bearing in mind the febrile nature of this market at present and the illiquid nature of it in 2008. All these are examples of breaches of FSA Principle 7 - which requires firms to be clear, fair and not misleading. Compensation should be due to anyone who or whose adviser was misled by the 2008 document to invest or switch into this fund. Standard Life should be reissuing this document with a clear breakdown of the fund's composition."

Full article: http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=179733&nl=MM_BN&dep=webops&dte=230109

Hopefully, this information will be useful to those considering drafting a complaint letter.

MikeJones_2

shaunrc wrote: »

This issue has been pursued again today by Moneybox on Radio 4.

Anyone interested can listen to the Moneybox programme referred to by shaunrc:

- Standard Life compensation (BBC Moneybox) (audio 7m 20s)

Mike


I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

MikeJones_2

Media Update:

- Standard unlikely to remediate pension sterling fund investors nearing retirement (Money Marketing 26/01/2009)

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

bob_a_builder

From above link to Money Marketing 26/01/2009

When quizzed over the clarity of the fund's literature, Acheson said he was comfortable that the company was always clear on what the fund set out to do. He said: "I do not know all the literature that has been produced on the fund over the years but what I do believe is that the totality of the information was sufficient for people to understand what was happpening."

Head firmly [strike] up his own .. [/strike] err- in the sand