QC to investigate Lautro leak: Heavyweight inquiry follows row with Pru over release of correspondence
Thursday 15 September 1994
The leak revealed an informal investigation by Lautro into the company's selling methods, which embarrassed the Pru because it had been boasting of its freedom from regulatory problems. The decision to call in an outsider to investigate underlines the seriousness of the row. Sources close to the investigation named Robert Carnwath QC as the lawyer, but Lautro - which yesterday formally agreed to hand over its responsibilities to the Personal Investment Authority - refused to comment.
Mr Newmarch said he was still waiting for the results of the informal Lautro investigation but the Pru had made no specific provision in its half-year results against the possible costs 'because we have not mis-sold'.
He accepted there could have been a handful of cases of sales staff acting outside the Pru's instructions.
Mr Newmarch was reporting half-year profits 16 per cent higher before tax at pounds 280m, helped by booming sales of unit trust personal equity plans. PEP sales were pounds 64m against pounds 12m a year earlier, while regular premium life sales fell from pounds 153m to pounds 126m.
The company also warned of another cut in bonuses on long-term life assurance policies next year.
The dividend was raised 8.9 per cent to 4.9p a share, despite predictions of subdued sales of long-term life assurance and a fall of a third in the group's profits when calculated on an accruals basis. Unlike pre-tax profits, this reflects long-term investment values.
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