An advice firm is ‘re-homing’ clients after discretionary fund manager (DFM) Strand Capital entered special administration.
Cheshire-based advice firm Advisability, an appointed representative of Pensionology.uk, was using Strand Capital as a DFM for its restricted pension advice proposition.
However as New Model Adviser® revealed in March, Strand Capital applied to be closed down. After it signalled this intention to the Financial Conduct Authority (FCA), the firm agreed with the regulator that it would not carry out any more regulated activity and now has these permissions restrictions on its FCA Register entry.
Earlier this week the FCA announced Strand Capital had entered special administration. The regulator warned it could not guarantee all money invested would be returned to the 3,000 clients of the DFM.
An agreement between Advisability and a client said: ‘We offer a restricted advice service on pensions. We are able to offer recommendations [on] products offered by Strand Capital (via their white label).’
A spokeswoman from the firm said Advisability is now working to move clients who have been affected by Strand Capital’s administration.
‘We are aware of the restrictions placed on Strand [Capital] which are affecting less than 5% of our group’s clients. Advisability had already begun to undertake an exercise to re-home these clients prior to the FCA’s recent announcement and we continue to work with these clients to find a suitable replacement at no cost to the client.’
Pensionology.uk, the principal of Advisability, also has a note on its FCA Register entry which states: ‘The firm must not carry on any regulated activities in relation to retail investment business including pension switches and/or pension transfers to any self-invested personal pension scheme, where the customer's funds are to be invested in non-mainstream pooled investments.’
A spokeswoman for the firm claimed this permission change came as the firm, as well as an advice business, also started up a pension scheme administration business in 2016. This side of the business initially had permissions only to facilitate investments into two investment providers – BlackRock and State Street.
However as Pensionology.uk looked to increase this pension administration business it wanted to use more investment providers, so it came to an agreement with the FCA to limit its products to anything but non-mainstream pooled investments, and on that basis could use more investment providers, the spokeswoman said.
She added the permission change applies to both the scheme administration and advice side of the business, but as the advice side does not recommend this type of investments she claimed this was not a problem.
‘The FCA confirmed that they would be happy to make this broadening and apply to the entire business, although this was only specifically requested for the pension operators side,’ the spokeswoman said.
Pensionology has three CF1 directors according to its FCA Register page. One of these advisers, Christopher James Burgess, was previously at now-collapsed advice firm Alderley Asset Management from 2003 to 2012.
As New Model Adviser® reported last year the Financial Services Compensation Scheme (FSCS) has paid out at least £491,000 over advice from Alderley Asset Management, including claims over Costa Rican tree plantation scheme Ethical Forestry.
A spokeswoman for Pensionology.uk said Burgess never gave advice on Ethical Forestry. She added his time at Alderly Asset Management was three year prior to the FSCS claims.