Page last updated at 12:34 GMT, Tuesday, 20 January 2009

Standard Life reimburses savers

Standard Life
Standard Life will reveal soon how many customers will be "remediated"

The giant insurance company Standard Life will reimburse some customers who invested their savings in its 2.4bn Sterling Fund.

The insurer upset them when it revealed on 13 January that the fund's value had fallen by 5% - about 1,237 each.

Many investors thought they had been saving in a cash fund, largely immune from falls on the financial markets.

Standard Life says it will "remediate" those who put in money between 23 December 2008 and 13 January 2009.

The issue was highlighted by the BBC Radio Money Box programme on 17 January.

John Gill, the firm's managing director for customer service, explained to the programme that not all the money had been put in cash, and that there had been no guarantee that the value of the fund might not fall.

"We do not believe there is a case for compensation but if customers have a particular complaint we will of course consider that," he said.

Cash

Now, the firm has change its tune after accusations it had misled customers about the true nature of their investments.

We have a lot of number crunching to do on every account
Standard Life spokesman

"I find out that the this innocuous fund was made of of asset backed securities, the most toxic of all investments - gobsmacked," said David Wells, Middle Rasen.

"I thought my fund was safe but they had put me into something that was very, very, unsafe," he said.

"Standard Life literature indicates that this is a safe haven for cash in uncertain times," said Ron Brown of Stockton-on-Tees.

"This is their lowest risk fund. Heaven help anyone in their higher risk funds," he added.

In fact only 12% is invested in bank and building society accounts, while the rest is in "a variety of other money market instruments," according to the fund's literature.

It is these which have led to the fund losing money.

Remediation

Standard Life says it will now "remediate" those customers who carried out any transactions in the fund between 23 December and 13 January.

That means putting them back in the position they would have been had they not carried out any transactions on their account.

"We knew there was a problem with the fund on 23 December and while we acted as quickly as we could it took us a while to put the correction into practice," said a spokesman.

"We don't know how many of the 97,000 customers will be affected.

"But we have a lot of number crunching to do on every account," he explained.

The insurer hopes to reveal more details later this week but it could involve adding units to each customer's fund and will only apply to the value of the transaction between the two "key dates".

But one side effect is that some customers who took money out between those dates may have been paid too much and could, in theory, be asked to refund some of their withdrawn investment.



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