Like many leading financial services providers, Scottish Widows Life and Pensions funds were in decline, and smaller funds created several issues for Scottish Widows. They would have difficultly providing adequate diversified holdings, which potentially would increase costs and the volatility of returns. There was a significant likelihood that funds would need to repeatedly sell larger properties and buy smaller alternatives incurring additional transaction costs. And liquidity management would become more challenging as the fund reduces in size. The solution was to create an ACS to pool and reshape funds in an attempt to increase returns. But this had never been achieved in the UK.
We have worked with Scottish Widows for almost ten years, so we were able to seamlessly take-up a central role in a complex process, bring all our usual pragmatism to the fore. This enabled us to engage with a wide range of stakeholders, everybody from administrators to HMRC, lawyers to the Scottish Widows internal team.
We devised and set-up the ACS specifically to ensure a functional operating model. Our people and their unique knowledge of both operating models and fund expertise enabled us to simplify a challenging process so that it was clear for all stakeholders.
Our role was highly valued and even saw us invited to step in and work through complicated tax implications, finding a faster and cheaper alternative to the existing tax advisor.
The Scottish Widows ACS is a success and has set the benchmark for similar schemes in the UK. Iain McGowan, Head of Fund Development, Reporting and Analysis at Lloyds Banking Group who own Scottish Widows said, “Throughout this challenging programme, Catalyst provided pivotal and invaluable advice. Their team demonstrated a can-do attitude and were seen as an extension of the Scottish Widows team. As a result of their innovative work, Scottish Widows has been able to provide improved returns and reduced risk for its customers.”
Note: This case study was first published by Catalyst prior to the Sionic merger