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Skandia platform posts £11m loss as RDR costs bite

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Skandia Investment Solutions, one of the UK's largest platforms, made a loss of £11m in 2011 as the cost of preparing for the Retail Distribution Review (RDR) impacted the business.

The platform - which includes Skandia MultiFUNDS, the group's ISA and unit trust arm, as well as Skandia MultiFUNDS Assurance - reported a total pre-tax loss of £11.4m, although this had narrowed from 2010's loss of £15m.

Meanwhile, parent company Old Mutual invested a further £29m into the platform in 2011, down from £52.5m the previous year.

Skandia MultiFUNDS reported a loss before tax of £6.5m, an improvement on the £10.3m loss in 2010.

Meanwhile the platform's life and pensions business posted a loss of £4.85m, compared to the £4.7m loss it suffered in 2010.

Skandia's directors said in the statement the loss was partly caused by internal investment made to prepare the platform for the post-RDR market.

"The FSA's Retail Distribution Review (RDR) is a key piece of regulation, given the company's focus on intermediated distribution," they said.

"This regulation will come into force on 31 December and the company has constituted a programme of works to ensure it has a full set of compliant products, services and tools in advance of this deadline."

The directors said the work to get the platform ready for RDR, coupled with "significant costs associated with the large volumes it has enjoyed over the last two years" had contributed to the loss.

Skandia is one of the UK's largest platforms, with assets under administration of £34.2bn at the end of June this year.

After tax, the platform has moved into profitability, reversing 2010's £20m loss to make a profit of £4.1m, with a policyholder tax gain of £12m providing a boost.

A spokesperson for Skandia said: "The statutory reporting figure post tax for the Skandia platform shows an overall profit of £4.1m.

"The platform held substantial surplus capital at the end of 2011, and this financial strength has been sustained into 2012. We continue to invest heavily in the development of our platform for the benefit of financial advisers and their customers."

The results have emerged after a momentous week for Skandia and its parent, during which it announced the Skandia brand name will disappear in the UK, replaced with Old Mutual Wealth.

Investment Week exclusively revealed the group is also merging its asset management businesses - Old Mutual Asset Managers and Skandia Investment Group - which will become Old Mutual Global Investors.

As part of the changes, Peter Mann (pictured), a well-known figure across the UK financial services industry and chief executive of Skandia UK since May 2010, will now become managing director for the UK market, reporting to Paul Feeney, chief executive of Old Mutual Wealth.

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