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A20 goes into administration

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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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. 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.

  2. You must be joking 26th January 2010 at 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 “cap in hand” to private equity houses for “development funds” like Twonky Law…

  3. 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!!!

  4. 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.

  5. 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”.

  6. 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.

  7. 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 cowboys over and over again?

  8. 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.

  9. 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?

  10. I feel so sorry for Malcolm Kilminster. When is he going to find that special home?

  11. 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.

  12. The label of Network should only be given to the firms who provide services for charges and no annual turnover is required by the member to remain in the network as long as they can pay the bills.

    Everyone is muddled up about networks as some are little more than nationals which squeeze in to the regulatory criteria.

    Many more people would use the services of networks, possibly not be appointed representatives, but use their services if the distinction was clearer.

    This type of case where firms go then start up and again get taken over etc just give real quality networks a bad name and advisers do not even investigate their services.

    Plus as Dathan Steele says they foot the bill too.

  13. If they were suspended due to failures in compliance procedures, why have they now gone into administration?

  14. A2O administrators fail to pay advisers.

    I did not receive my 10000 pounds from a2o this week, I have worked for three months to earn this fair pay for numerous cases, now I have to tell my wife I have failed to keep the wolf from the door and we are now unable to manage for the time being.

    The commission account at a2o is a trust account and should not be seized for disposal by the administrors, put simply I have Bern robbed and wonder how the FSA expect me to service these Clients with no pay!!

    This industry has been crushed and our good, honest and beneficial work for the betterment of our Clients goes unrecognized.

    So why has the FSA not forced A2O to release the commissions to us the Advisers at A2O, if is the network that has failed not the adviser members?

    The FSA should ensure I and my fellow members do not have our commissions stolen so that we can function and provide our Clients with the service they need.

    To the Directors of A2o I say you have a moral duty of care for the members and commions as per our contract are in your care as trustees not an asset of the business, release our money and let us all leave this failed business, seek authorisation elsewhere and continue our human right to work and care for our families.

    You have always stated your are Christians and have the higest ethics and moral standards. I challenge you to prove it!

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