Lloyds defeated in £100bn savings row

LLOYDS could be hit with a £300m bill after losing a legal battle with investment firm Standard Life Aberdeen over a huge pension contract.

The bank should not have axed a deal for SLA to manage £100bn of pension funds on its behalf, a tribunal has found.

It is a serious blow to Lloyds and calls into question a decision to transfer most of the funds to wealth firm Schroders as part of a major deal to conquer the financial planning market.

Lloyds cannot appeal against the tribunal’s ruling, leaving it with the option of either scrapping the Schroders agreement and going back to working with SLA, or forking out millions of pounds in compensation.

It is thought the bank is more likely to pay the money out than switch back.

Lloyds said: ‘ Our strategy remains unchanged, which is to do the right thing for customers. We will discuss starting the process of an orderly transfer of assets to our new partners.

‘ We will continue to work closely with Standard Life Aberdeen to ensure no disruption.’

The pension funds had been looked after by Aberdeen Asset Management under a contract due to end in 2022.

But Lloyds last year decided to pull the plug early because Aberdeen had merged with Standard Life, another pension firm which could be seen as a direct competitor to Lloyds.

The bank then said it would shift the money to other businesses, with £29bn going to US investment titan Blackrock, and the rest to Schroders.

This deal with Schroders is fundamental to Lloyds’ future growth plans, forming part of a joint venture which will allow the bank to offer investment and wealth planning advice to customers with up to £1m.

Lloyds wants to gain an extra 1m pension customers by 2020 and break into the top three players in financial planning within five years, which would require a massive growth rate as Lloyds has just 1.5pc of that market.

Schroders is pushing ahead with the joint venture plans and if Lloyds decides to move the money, it could have to stump up as much as £300m in fees owed to SLA until 2022.

Laith Khalaf, of trading firm Hargreaves Lansdown, said: ‘This is a big victory for Standard Life Aberdeen and a serious setback for Lloyds’ new foray into wealth management.

‘Negotiations will now begin between Standard Life and Lloyds to find some sort of resolution.’ Lloyds shares rose 0.1pc, or 0.06p, to 65.43p. SLA shares rose 1pc, or 2.75p, to 268.9p.