Berry Birch was hit by the continued sluggishness of the housing market and by 'intense competition' from Direct Line and other telephone-based insurers. More recently, personal pensions business has suffered because of the Securities and Investments Board's assault on mis-selling.
John Cole, managing director, said: 'It's a disappointment to us rather than a crisis. The growth of the business is still there and turnover will go up to pounds 7m for the year (to the end of this month), an increase from pounds 6.4m last year.'
Berry Birch hopes its second-half results will add about pounds 200,000 to its interim pre-tax profit of pounds 460,000. It intends to maintain the level of its final dividend and is confident about the prospects for 1994.
The firm's new office in Clevedon, Bristol, has continued to lose money. The office was set up to handle mortgage business arising from Berry Birch's links with Wilson Connolly and Crest Homes, the housebuilders. 'The mortgage operations have not seen the expected pick-up in the property market,' Mr Cole said. 'All the housebuilders we deal with are forecasting an increase in the number of houses selling this year.'
The tough competition from the direct insurers has prompted Berry Birch to reorganise its personal insurance business, with the loss of some jobs. Clients seeking motor insurance will in future be passed on to Quoteline, a specialist firm.
Mr Cole said the SIB's action to counter abuse in the pension transfer market would damage all personal pension business, because the product itself had been tarnished. 'The issue is not the product but the advice associated with it,' Mr Cole added.
Although Berry Birch regards this as a short-term problem, the pensions division will fail to meet its targets in the year just finishing. It will be up on the previous year.Reuse content