Tribunal rules for Standard Life in Lloyds Scottish Widows dispute

Tribunal rules for Standard Life in Lloyds Scottish Widows dispute

Keith Skeoch

A tribunal has ruled that Lloyds Banking Group did not have the right to cancel a £109bn investment management deal with Standard Life Aberdeen last year.

The dispute dates back to last February when Lloyds declared that a major account managed for subsidiary Scottish Widows by Aberdeen Asset Management should be pulled.

Aberdeen Asset Management bought an eight-year contract to manage assets for Scottish Widows in 2014 for £550 million.



However, after Aberdeen merged with Standard Life to create Standard Life Aberdeen last year, Widows’ parent Lloyds pushed Standard Life Aberdeen off the funds as it then viewed the arrangement as a conflict of interest for SLA because Aberdeen had, in effect, become its competitor.

Global investment manager Schroders then emerged as the suitor set to take control of the contested £109 billion Scottish Widows investment mandate.

Lloyds later agreed to divide up the mandate between BlackRock and Schroders, with whom it has set up a wealth management joint venture.

Last year SLA sold its insurance business to Phoenix and argued it was therefore not a competitor with Lloyds, and today it announced that a tribunal set up to decide on the matter had ruled in its favour.

Keith Skeoch, chief executive of SLA, said: “Now that the arbitration panel has ruled in our favour, we will carefully consider our next steps, working constructively with LBG to bring the matter to resolution.”

Shares in SLA rose almost 2 per cent on Tuesday while Lloyds shares were flat.

Lloyds said it was disappointed with the outcome of the arbitration but that it would work with SLA. “Our strategy remains unchanged, which is to do the right thing for customers,” it said. “We will discuss starting the process of an orderly transfer of assets to our new partners BlackRock and Schroders. We will continue to work closely with Standard Life Aberdeen to ensure there is no disruption to performance or service.”

Hargreaves Lansdown senior analyst Laith Khalaf said: “This is a big victory for Standard Life Aberdeen, and a serious setback for Lloyds’ new foray into wealth management.

“While this is relatively low margin business for Standard Life Aberdeen, it’s clearly a large sum of money, and against a backdrop of fund outflows, will be particularly well-received. A big part of the rationale for the merger between Standard Life and Aberdeen was built on scale, which £100 billion of assets clearly speaks to.

“Lloyds has already ear-marked the lion’s share of these assets to form the basis of its new joint venture with Schroders, and has also hired Blackrock to manage some passive strategies.

“Negotiations will now begin between Standard Life and Lloyds to find some sort of resolution. This could involve Standard Life Aberdeen remaining as manager of the assets until 2022, or Lloyds stumping up some cash for breaking the agreement early.

“We think there could even be a bit of mix and match, where Lloyds pays to release some assets to get its joint venture with Schroders up and running, while leaving some funds with Standard Life Aberdeen. We’ll be watching for further details as and when negotiations are concluded.”

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