M&G is taking legal action against Royal London over its £86m purchase of the Ascentric platform.
The asset manager is seeking damages of at least £27m plus interest at the High Court.
Lawyers for M&G alleged that Royal London failed to disclose that the platform held high-risk investment bonds including CFB Bonds during the acquisition process, reports The Financial Times.
It alleged that the business — also known as Investment Funds Direct Limited (IFDL) — had made CFB Bonds available on its platform and that “there was no liquid market” for the bonds “outside IFDL’s own platform”.
CFB Bonds with a face value of about £27m were purchased by 553 investors, according to the lawsuit.
M&G claimed that customers who had bought the bonds had had been unable to sell them. Some made complaints to the Financial Ombudsman Service and the Pensions Ombudsman.
Earlier this year, the Financial Ombudsman Service upheld a complaint against Ascentric over a 2018 CFD Bonds investment.
M&G bought the Ascentric platform business from Royal London in 2020. It was rebranded to M&G Wealth in March 2021. Around £15bn sits on the platform, which is used by some 1,500 advisers.
In September 2024, M&G confirmed it will exit the platform market as part of its simplification plans.
Royal London and M&G both declined to comment on the High Court case.
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