Advisory firm Skipton Financial Services (SFS) has set aside around £9m to cover costs associated with a review into its investment advice which identified documentation issues in a number of cases.
The firm said in its director's report and annual accounts dated 31 December 2012, that it was too early to determine the total cost arising from the review but the provision made in the statement represents "management's best estimate".
The company said: "During 2012 the company began a review of its advisory processes. Initial enquiries have identified documentation issues in a number of cases and have indicated that these may result in some amounts being paid by the company."
The net effect of the review on the company's comprehensive income was £1.3m, as the £9.1m put aside for compensation was offset by a £7.8m recovery from professional indemnity insurance.
Overall, the firm spoke in its accounts of a "year of two halves" with the first half seeing the business' performance on target and achieving its milestone of £2bn on platforms.
However, before taking into consideration the ramifications of the review, the company posted a profit of only £42,000 for 2012, compared with a £2.9m profit in the year before.
The firm said: "Management focus has been targeted at the review which has had an adverse impact upon business volumes and consequently upon financial performance."
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