Directors in pensions scandal may be barred
Company directors will face the unprecedented threat of being expelled from the financial services industry if they fail to clear up the pounds 9bn pension misselling scandal on time.
According to industry sources, Helen Liddell, Economic Secretary to the Treasury, will today announce a crackdown on directors who fail to meet deadlines for compensating investors who have been missold personal pensions.
The statement by Mrs Liddell is expected to be made in the House of Commons. She will outline strident penalties which will include expelling and personally fining directors in the worst cases.
It is understood that companies will also be forced to "name and shame" themselves, by paying to take out newspaper advertisements reporting their misconduct, if they fail to meet tough new Treasury deadlines for compensating investors.
Further penalties could bar individual members of the financial services industry from working in their specialist fields, for either their own or other companies.
The crackdown is an unprecedented assault on directors' security of employment. Under current rules, a directors can only be expelled from holding a boardroom post by the Department of Trade and Industry.
The tough penalties will only become possible because of a sweeping change to regulation of financial services due to be introduced early next year. Under the change, individual directors and sales people, rather than firms, will have to be registered with regulators.
It will be the first time Mrs Liddell has set out new penalties for missing deadlines on the review of misselling currently being carried out on behalf of 600,000 investors.
Besides the tougher penalties, life insurance companies and investment firms are finding that the cost of the pensions review is likely to be nearly double what was originally thought.
Prudential and United Assurance, two of the biggest culprits, have nearly doubled provisions for compensating investors, to pounds 450m and pounds 150m respectively.
If the pattern at these firms is repeated across the industry. Investors may require compensation of around pounds 9bn - more than 20 times the amount lost by pensioners at companies run by Robert Maxwell.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies