Financial Planner and wealth manager Quilter, one of the UK's largest adviser firms, has allocated an additional £7m for redress of British Steel Pension Scheme members and confirmed it cut 200 Financial Planner jobs in 2021.

The announcements were included in the firm’s preliminary results for 2021 out today.

Quilter acquired advice firm Lighthouse which was found to have given unsuitable DB pension transfer advice to BSPS members. Quilter said the advice was prior to its acquisition of Lighthouse in 2019.

Quilter said it has also reduced its number of its restricted Financial Planners. More than 200 have departed the business, leaving 1,563 restricted Financial Planners in the affluent section of the firm (2020: 1,765).

Net flows increased considerably for the year with £4bn of net flows compared to £1.5bn in 2020. The net flows represented 4% of opening assets under management.

The Quilter Investment Platform saw particularly strong flows in 2021 with £3.5bn in net flows up 133% year on year. Quilter completed the migration of advisers onto the new investment platform in February 2021 and saw gross flows from IFAs increase by 63% over the year.

Assets under advice and administration increased 13% to £11.8bn (2020: £99bn), with growth supported by the improved net flows and positive market environment.

Adjusted profit before tax rose 28% to £138m (2020: £108m).

The £7m additional cost of pension transfer claims is on top of the £24m provision made at the end of 2020.

The FCA launched a probe into DB transfer advice given by advisers at Lighthouse Group in June 2020 following the news of a DB contingent pension transfer ban by the regulator. The probe is in relation to historic advice provided by Lighthouse Advisory Services Limited to customers wanting to transfer out of the British Steel defined benefit pension scheme. 

Paul Feeney, CEO at Quilter, said: “The provision made in respect of certain DB to DC pension transfer advice provided by Lighthouse advisers prior to Quilter’s acquisition of Lighthouse has increased by £7 million from the end-2020 level predominantly due to the identification of some instances of unsuitable DB transfer advice being given by Lighthouse advisers beyond that relating to former British Steel Pension Scheme members, which may have caused customers to sustain losses.

“We continue to work proactively with the FCA and the skilled person review relating to DB to DC pension transfers by Lighthouse to ensure good customer outcomes for the clients involved. Even though the advice to transfer these pensions predated Lighthouse transitioning to our systems and controls after our acquisition of Lighthouse, we will ensure that these clients are treated fairly, consistent with the FCA’s requirements and our values.”

Quilter has since sold the advice arm of the Lighthouse Group to MKC Wealth for an undisclosed sum.  The deal completed on 1 November 2021.

It was one of a number of sales made by Quilter in 2021 as it re-structured its business to shift focus on high net worth and affluent clients.

In its preliminary results Quilter said that its new business structure resulted in cost savings of £45m in 2021 and should lead to “double adjusted profit” by the end of 2025.

Mr Feeney said: “2021 was an important year for Quilter as we completed our planned strategic evolution through the successful migration of customers and advisers onto our new platform and completed the sale of Quilter International for £481 million. We also demonstrated strong financial performance with more than doubled net inflows of £4 billion and achieved revenue growth of 10% while limiting cost growth to 5% to deliver adjusted profit growth of 28%.

“We are pleased to be delivering good results in these difficult times with significant geopolitical tensions at the centre of all our concerns. In 2022, our focus remains on managing our business towards delivering the targets we set out at our Capital Markets Day last November. This will include increasing flows to our platform, particularly from third party advisers, product innovation and growth in our restricted adviser base”.               

Quilter’s 2021 adjusted diluted earnings per share increased 42% in 2021 to 7.4 pence, supported by a low tax rate and a reduced share count due to a capital return programme.

Quilter completed its £375m share buyback programme in January using the proceeds from the sale of Quilter Life Assurance. The firm saw 264m of shares purchased at an average price of 141.97 pence per share, leading to a 14% reduction in share count since the programme's inception.

The board has recommended a final dividend of 3.9 pence per share, bringing the total dividend for the year to 5.6 pence per share, an increase of 22% year on year.

• The board has also proposed a further £328m capital return (20 pence per share), equivalent to 17% of market capitalisation, through a B share scheme accompanies by a share consolidation. The proposal is subject to regulatory and shareholder approval.