Standard Life Aberdeen has disputed Lloyds Banking Group and Scottish Widows’ termination of its £109bn investment mandate.

In February this year, Lloyds and Scottish Widows served Standard Life Aberdeen notice to terminate the long-term asset management arrangements between them, which total around £109bn in aggregate. However, Standard Life Aberdeen has today, 8 May 2018, disputed the group’s right to do so.

The contract, which the two signed after the sale of Scottish Widows Investment Partnership in 2014, held a clause which allows the Lloyds’ businesses to terminate the contract “in the event that Aberdeen was subject to a change of control with a material competitor”.

In a statement published today, Standard Life Aberdeen said: “Standard Life Aberdeen has informed Lloyds Banking Group that it does not agree that, following the merger of Aberdeen Asset Management PLC and Standard Life plc, Standard Life Aberdeen was in material competition in the UK with Lloyds Banking Group.”

As a result of this view, Standard Life Aberdeen has stated that it does not believe that Lloyds, Scottish Widows or its affiliates has “the right to terminate” the investment management arrangements.

Standard Life Aberdeen added: “The parties are engaging with each other within the framework of the dispute resolution process envisaged in the investment management arrangements.”

Responding to today’s statement, a Scottish Widows and Lloyds spokesperson said: “We note and are disappointed by the comments made by Standard Life Aberdeen, particularly in the light of our position as a major customer.

“Standard Life Aberdeen is a clear and material competitor of Scottish Widows and Lloyds Banking Group in the UK and to suggest otherwise is not credible.

As a result, the spokesperson noted that the group holds the view that it had the right to terminate its investment contracts with Standard Life Aberdeen, and that it acted accordingly, serving notice in February.

“We are confident of our legal position and that our actions are in the best interests of our customers, and we are therefore surprised at the course of action pursued by Standard Life Aberdeen,” Scottish Widows and Lloyds spokesperson added.

At present, the annual revenue associated with the arrangement’s assets under management, c.£129m accounts for around 4.4 per cent of Standard Life Aberdeen’s full-year 2017 pro forma revenue, it has said. The firm said it will provide a further update “at the appropriate time”.

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