A20 goes into administration
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IFA network Alpha to Omega has been placed into administration, Money Marketing can reveal.
Benedict MacKenzie’s Simon Underwood and Rupert Mullins have been appointed joint administrators for the network as of January 25, 2010.
Last week, the Financial Services Authority suspended Alpha 2 Omega from all regulated activities over concerns around its compliance arrangements.
A20 sent a letter to all its members/advisers informing them that the regulator has decided to change its permissions and ordered them it to cease all regulated activities for which it has permission from 5pm on January 21, 2010.
Earlier this month the regulator also ordered the IFA network to stop new business on certain funds, including Arch cru, as well as on structured products, pension transfers and drawdown.
Regulatory Legal Partner Gareth Fatchett says: “We are advising 12 members of A2O concerned about the recent upheaval at the network.
“My clients are concerned for their pipeline business and their clients.”
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Readers' comments (12)
Phil Stevenson | 26 Jan 2010 5:05 pm
Surprise, surprise another quasi advisory firm/ network goes belly up. Fed up of hearing of these outfits who are going to grow and grow and reinvent the advice proposition for clients. Seems like they would be better studying some basic bookkeeping or accounting before they took on the world. The only advisory proposition that seems to work consistently is small, local firms that keep thier focus on the face to face aspect of advice and don't get top heavy with managers, HR, marketing, compliance,promotional budgets and the like. Small is beautiful Simpuls.
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You must be joking | 26 Jan 2010 5:14 pm
I agree wholeheartedly with Phil.
When it comes to having a good business model and a need to demonstrate TCF is the smaller firms who shine through.
Our business are adaptable, our overheads are controllable and our clients are foremost in our processes, and finally, we don't need to go to private equity houses for "development funds" like Towry Law.
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Anonymous | 26 Jan 2010 5:18 pm
What goes around comes around Mr Richard Lindley and Mr Malcolm Kilminster. You upset a lot of people and still didnt get your act together!!!
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Anonymous | 26 Jan 2010 5:25 pm
Here we go again...
Well done FSA for not looking after another set of AR's.
To the AR's of A2O - you have my sympathy, the same happened to me last year.
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Evan Owen | 26 Jan 2010 5:45 pm
How many network/big firm failures will it take before the FSA gets to grips with the eventual prospect of one solitary firm being left to fund the FSCS.
Hector said the FSA wants "to maintain diversification", this is one prime example of the 'big is beautiful' theory being unsound, the biggest example was the banks who were "too big to fail".
The RDR plays into the hands of the empire builders who think "multi-ties rule OK" and the banks/providers. So they grow big and appear fat, until they fall over and flatten society under their bulk.
Come on Hector, in the name of your 'diversification' let's have a ceasfire, we can work it out without anti-competitive rules and regulations which cause more consumer detriment than they are expected to prevent, and by that I mean the RDR, or the "Kenmir effect".
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Anonymous | 26 Jan 2010 6:17 pm
what a shame for the decent people that live in the financial service industry, the staff of a20 who have mortgages to pay, the members who rely upon the network to deliver a competent business, the clients who will only worry at the reasons why their financial advisor can no longer act for them in the interim period, the worry, the loss of time and energy.
Answers yes, but a timely reminder for all that we live in very different times and these times will have an effect on all of us at some point.
I sincerely hope that the staff at a20 find a new path quickly and that the efforts of the last few weeks are remembered by the efforts they all put in, they are from me.
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Dathan Steele | 26 Jan 2010 8:38 pm
I'm sure these lads will set up a new firm at the drop of a hat and the liability of the old firm will be thrown on the Levy.... why should decent, professional IFAs have to subsidise these people over and over again?
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PJB | 26 Jan 2010 9:47 pm
Phil, whilst I would agree that all businesses need to get the basics right, and the financials are pretty high up on that list, I would disagree with your assertion that only small local firms work.
The question is surely not whether the firm is large or small but more to do with the culture of the firm, from the senior management right through to the person that makes the tea the culture has to be one of excellence, ethics, service and delivery.
I can think of many large advice based businesses (whether they give financial, legal or accountancy advice) that provide excellent service levels to their clients, whilst working in a highly regulated environment. Likewise I have seen many small IFA firms who give appalling advice.
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Anonymous | 27 Jan 2010 2:52 am
If the FSA needed an example of how big is not better in the IFA space then this is it. Why do they not understand that big brokers do not work in TCF?
Traditional IFAs who make a good living from advising - not selling to - clients with needs have never been a regulatory burdon.
Allow a larger firm with money to burn to buy a smaller firm (client bank!) and you are asking for trouble.
Allow someone involved in an FSA investigation (which is already 6 months behind the curve) to leak the background and another firm is dead.
What about the advisers?
What about the clients?
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CEI Compliance | 27 Jan 2010 9:48 am
From a compliance perspective I can see that some larger companies have failings that smaller companies do not because they are not ever likely to be faced with the same scale of challenges.
I think it unfair to say that smaller firms are better in any way because their costs are controllable etc as whereas this may be true, you can get the "principle agent" view build up over time, leading them down the wrong path. Sometimes an external set of eyes can spot trends and anomolies easier than those involved in the day to day work.
Some responsibility has to be taken on the part of the advisers who, I am sure, thought they were doing a good job, obviously had gaps in competence that should have been identified by their supervisors/managers/T&C/compliance people. The company also failed in some way wheter it was to correctly monitor or address the CPD/development/QA of cases or perhaps even track the complaints trends and MI (not just the data) produced.
The potential failing of any firm should be lamented as at the end of the day (apart from the support staff and advisers), and most importantly, the clients will suffer yet another change of advisor and their confidence in the financial services sector will be knocked again - an aim the FSA is set to combat!
However, on a positive note, administration is not always a definite shut down, and the company may well emerge better placed, better managed and stronger than before. I wish them well.
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