UK - A court ruling against the trustees of the WTL International Limited Retirement Benefits Scheme relating to alleged negligent advice from Scottish Widows and a scheme actuary will not adversely affect other cases, the Actuarial Review Company (ARC) has claimed.

Allegations of negligent advice provided by Scottish Widows' internal actuaries in 1999/2000 to company pension schemes switching from with-profits deferred annuity guaranteed contracts (DAC) into the Scottish Widows' Pension Managed Fund were first raised in May 2008, with ARC suggesting up to 100 schemes could be affected. (See earlier IPE article: Scot Wids may face £1bn 'negligent' advice claims)

The only case to come to court so far was brought by the trustees of the WTL scheme, who filed papers in the Scottish Court of Session - equivalent to England's High Court - in June 2009. They alleged that in 1999 the internal Scottish Widows actuary, Eric Edwards, also appointed as actuary for the scheme, had failed to "give an impartial and balanced assessment of the advantages and disadvantages of the switch".

The trustees also argued there was a lack of advice on the value and importance of the guarantees in the DAC and a failure to provide a detailed analysis of the options available. However, partly because of the significant involvement of advice from an independent financial adviser, the Scottish Court found no breach of duty in terms of negligent advice and dismissed the claim.

But Roger McNicol, director at ARC, said the failure of the WTL case was based on reasons specific to that pension scheme, particularly the use of an IFA to supplement the actuary's advice. In contrast ARC has been in discussions with more than 40 pension schemes on this issue, and he noted "in most of these other cases the IFA involvement was minimal or none". (See earlier IPE article: ARC in talks with 40 schemes against Scot Wids)

Additionally he highlighted the judgement had generally established that there was a conflict of interest in the actuary being employed by both Scottish Widows and the schemes, and that the actuary did make a recommendation. "That is encouraging for the other cases," said McNicol.

He added that the remaining cases are "very much still alive" and the legal advice is to continue with the process.

"We are continuing with lawyers and other clients to push this thing forward. Two writs have been issued and the other clients we are dealing with are not that far down the line but they are taking legal advice," said McNicol.

However while there are some efficiencies in the cases through the similarities of the claims, he pointed out the slightly differing circumstances of the clients and a lack of class action rules in the UK means each legal action will be pursued separately.

Scottish Widows was unavailable to comment at the time of publication.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email