Insurer may face 'mis-selling' claim

Life assurer Scottish Widows may face a legal claim for up to £1 billion (€1

Life assurer Scottish Widows may face a legal claim for up to £1 billion (€1.25 billion) in compensation over allegations that it gave "negligent" advice to pension schemes, according to newspaper reports yesterday.

An article in the Sunday Timessaid that a High Court action was expected to be launched against the Lloyds TSB unit by one of about 100 company schemes affected within days.

The life assurer has been accused of encouraging the company schemes to give up guarantees that protected against the risk of pensioners living for longer.

The allegations raised by the Actuarial Review Company (ARC), an independent consultancy that worked with one of the schemes, were sent in a dossier to the financial watchdog, the Financial Services Authority (FSA), on Friday.

"ARC's conclusion is quite clearly that Scottish Widows has a case to answer," ARC Director Roger MacNicol said in a statement seen by Reuters.

"Our concern is not to criticise Scottish Widows but to ensure our clients gain the redress they deserve," he added.

The article said Scottish Widows was expected to dispute the claims.