There are fears in the industry regarding Lloyds TSB's shareholder dividend, due to endowment mis selling.
According to Cazenove "compensation for endowment mis selling may be charged against profits for 2002 and [dividend] estimates for 2002 and 2003 may be downgraded". However, the chief executive of Lloyds TSB said that there were no plans to cut the dividend which is currently around 6%.
Lloyds TSB are not the only company in this predicament, especially as the Financial Services Authority, the industry regulator commented that their fines would not be allowed to be taken from policyholder funds, but must come from shareholder funds.
This is good news for policy holders as their returns will not be affected by company fines. However, it brings a new dimension for shareholders who will have to assess the strength of compliance with the rules by the company they are investing in.
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