Towry may sue over mis-selling liability

Click to follow
The Independent Online

Towry Law, one of the UK's fastest growing chains of financial advisers, yesterday was mulling the possibility of suing its former auditors and Hogg Robinson to recoup some of the £15m of unexpected liabilities it may have to pay to victims of pensions mis-selling.

Towry Law, one of the UK's fastest growing chains of financial advisers, yesterday was mulling the possibility of suing its former auditors and Hogg Robinson to recoup some of the £15m of unexpected liabilities it may have to pay to victims of pensions mis-selling.

The liability comes from pensions that were mis-sold by a firm called Advizas, which Towry Law acquired for £16.5m in January 2000 from Hogg Robinson, which sells business management services.

Douglas Black, chairman of Towry Law, said that the possibility of suing PricewaterhouseCoopers, its former auditors, and Hogg Robinson "certainly needed to be considered". Mr Black was speaking after Towry Law made an official Stock Exchange announcement yesterday confirming that its liabilities from pension mis-selling were larger than had been anticipated.

The company also said yesterday it had received an approach for the business, which could be valued at around £100m. AMP, the Australian life insurance giant, is the most likely buyer of Towry Law and is known to be watching the situation closely.

Towry Law was aware of the mis-selling liability when it bought Advizas. But the company said that it became clear when the Advizas business was audited for the year ending 31 December 2000 that the liability had been "materially understated". PwC carried out due diligence in the deal to buy Advizas.

Towry Law is consulting its lawyers over whether it has a case to sue either PwC or Hogg Robinson. It stressed yesterday that no decision had yet been made. PwC is no longer the company's auditors and yesterday refused to comment on the situation. Deloitte & Touche have been appointed as auditors and financial advisers to the firm.

Towry Law, whose shares were suspended on 23 February after it became aware of the extra costs of mis-selling, wishes to formulate a way to deal with the liability as quickly as possible. However, pursuing a legal claim could take two years to go through the courts.

The business is also in talks with the Investors' Compensation Scheme (ICS), which may fund some of the liability.

Mr Black said that pursuing both the ICS and a possible legal action "were not mutually exclusive".

Comments