Provisions knock profits at North of England BS

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The Independent Online
NORTH of England Building Society yesterday reported a sharp fall in pre-tax profits following a hefty provision to compensate investors for poor advice over their pensions, writes Nic Cicutti.

The society set aside more than pounds 1.5m, three times the sum first expected, to recompense savers who were advised by the society's independent financial advice arm. It was also forced to set aside more than pounds 2m for bad mortgage debts.

Pre-tax profits fell 19 per cent to pounds 13.5m in 1993. But Robert Lindon, group chief executive, said: 'We believe the worst has now passed and are confident that growth in profitability will be resumed.'

He said the society's gross receipts from its 250,000 savers in 1993, at pounds 772m, were a record.

Last October, North of England became the first directly regulated member of the Securities and Investments Board, the City's main watchdog, to face a public rebuke for the poor advice given to clients.

Over a period of several years, clients were encouraged to switch their occupational pension schemes into private plans.

Almost 1,800 client files had to be re-investigated. The society announced last year that it would no longer operate as an independent financial adviser, preferring to become a tied agent of General Accident.

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