Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1117484

ShareSoc blasts PwC's 'incredible' £100m Beaufort fee

Investor group attacks auditor for seizing client assets in failed wealth firm Beaufort Securities, claiming it makes a mockery of regulations.

 
ShareSoc blasts PwC's 'incredible' £100m Beaufort fee

Auditor PwC is charging clients of failed wealth manager Beaufort Securities an 'incredible' sum with 'no justification', an investor's rights group has claimed.  

ShareSoc, which campaigns in how share ownership is administered, said: 'PwC is proposing to charge an incredible £100 million for the wind-down over a period of four years.

‘[It has] provided no justification of either the amount or timeframe for the simple task of transferring an electronic registry of client assets/money to one or more replacement brokers.’

The accounting giant, which is overseeing the recovery of client assets of Beaufort Securities and sister business Beaufort Asset Clearing Services after they were declared insolvent in March, stunned claimants last month when it wrote down its previous estimated recoverable total from £850 million to £500 million.

That was due to 'a number of highly illiquid and potentially nil value positions,’ it added, and 'around 700 clients with assets valued over £150,000 may experience a loss up-to a maximum of 40% on their ring-fenced assets.’

'The suggestion that PwC as special administrator can seize client property and treat the owners as creditors of the failed entity makes a mockery of regulatory protections for investors in the UK,' it said. 

ShareSoc said it would campain against 'the special administrator’s right to seize ringfenced property’, and questioned 'the special administrator’s cost and time estimates in relation to the wind-down’.

The group also criticised the FCA for allowing the company to continue operating while being investigated by the FBI, and emphasised it was FCA regulated with client assets firewalled as per FCA rules.

The FCA suspended all activities at Beaufort Securities on 2 March, after the US Department of Justice indicted the firm for fraud and money laundering the previous day.

14 comments so far. Why not have your say?

PETER BOTHAM

May 08, 2018 at 17:53

Year after year administrators charge exorbitant fees for winding up a company, always ensuring that it takes an eternity to conclude proceedings and invariably ensuring that their fees are covered by any cash/ assets that are recovered. The real creditors invariably get stuffed. When will something ever be done ? Will the FCA step up to the plate ? Don't think I'll hold my breath.

report this

Tony Peterson

May 08, 2018 at 17:55

It is worth visiting ShareSoc's site and reading their statement.

It should be a wake up call to all who trust that the FCA will protect their supposedly "ring-fenced" investments held in nominee accounts.

report this

David Wheelton

May 08, 2018 at 19:57

I await to see what they charge Carillion for handling the bankruptcy

report this

gadgetmind2

May 08, 2018 at 21:59

More power to their elbow. Movre asset X in specie from account A to account B, simples. job done, charge £50 max. They are taking the piss and need a big fat slapping.

report this

Alan Selwood

May 08, 2018 at 22:18

There are two major scandals here:

1) That the FCS rule book states (rule 135) that it is permissible for those winding up the company to pay themselves out of ring-fenced client assets. I did not know that until today, and I've been an investor since the 1960s. So what happened to fair dealing and transparency? What worth is there in any government statement that "our investor protection is the best in....... "

This is as unfair as a self-aggrandising dictator of a banana republic. (Some of whom get lynched by the mob).

2) That any company should have the bare-faced cheek to claim that winding up a company costs £100 million. If it was opened to competitive tender, I'm sure they'd get queues along the street to do the same job for £5 million.

The government needs to rewrite the rule book at once, and refuse to allow PwC to take any money from ring-fenced assets. And if they don't like that, they should be made to prove at their own expense that every single paragraph is both essential and fairly charged at no more than a highly inflated £500 per hour (however high and mighty PwC thinks it is). No proof, no fee at all.

I rest my case.

report this

Darrener2

May 09, 2018 at 09:05

In a liquidation, PWC charge from £129 per hour for support staff up to £865 per hour for a partner. Their tax department fees go from £160 per hour for support up to £1315 per hour for a partner - and those were the rates for 2017/18!!

I'm in the wrong job!!!¬

report this

Andrew Vincenti

May 12, 2018 at 09:15

Gents, do we really expect the FCA, which stands for Fraudulent Conduct Authority, to do anything. Time and time again, they have shown they only look after financial firms. Do we really thing they will change and do anything different this time?

report this

Andrew Vincenti

May 12, 2018 at 09:15

Gents, do we really expect the FCA, which stands for Fraudulent Conduct Authority, to do anything. Time and time again, they have shown they only look after financial firms. Do we really thing they will change and do anything different this time?

report this

Robert Carey

May 12, 2018 at 09:52

Maybe the FCA should fine PWC for this exorbitant fee or be forced to hand it over to another firm that will treat these investors fairly.

report this

LouisV-W4

May 12, 2018 at 11:50

What PwC is doing is governed by The Insolvency Service, not the FCS.

report this

retired investor 2

May 12, 2018 at 13:59

Its alarming to find out nominee accounts can be raided by third parties. Hargreaves Lansdown is allowed to invite clients to consoidate holdings with them without a word about the default risk over £50K. Its shocking that FCA seems so incompetent as to allow this.

report this

Robert Carey

May 12, 2018 at 19:01

It doesn't matter who they are governed by the fact of the matter is it's daylight robbery and whichever body they are answerable to should step in and give them a very heavy slap down.

report this

Tony Peterson

May 12, 2018 at 19:16

I'm afraid that systemic corruption rules. I would be amazed if any regulatory authority has the balls to knock this outright theft down.

Because most of the regulators are as much part of the problem as they are not part of the solution. Unless somebody can prove me wrong.

report this

The Old Man

May 13, 2018 at 12:33

I support most of what has been said. Basically 'ring fenced assets' should mean just that and if it isn't the case the law needs changing to give the term the required meaning.

What of the FCA? Heaven help all those whom they are allowing to suffer under their protection.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

IFS says taxes need to hit historic highs to save NHS

by Dylan Lobo on May 24, 2018 at 07:56

Sorry, this link is not
quite ready yet