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Bates’ claims could fall on the FSCS

Future misselling claims against Bates Investment Services may fall upon the Financial Services Compensation Scheme after the firm went into administration as part of the Money Portal management buyout.

Administrator Ernst & Young has confirmed Bates was placed into administration on June 17, along with parent company The Money Portal Limited, after being unable to meet debt obligations.

TMP assets, including Burns Anderson, Sage Financial and Willis Owen, have been sold to Honister Capital while the principal assets of Bates have been sold to HC subsidiary Honister Partners.

The FSCS says it would pay compensation for claims where a firm has been placed in administration and declared in default, although it would attempt to recover some costs if assets are sold.

Burns Anderson, Sage Financial and Willis Owen have been transferred as going concerns, so any claims for these firms would fall on Honister Capital.

Informed Choice joint managing director Martin Bamford says: “This sort of behaviour puts unnecessary and intolerable pressure on those IFAs who do the right thing.”

Towergate Financial Services went into administration recently with its adviser firms bought by Towergate Underwri­ting. Towergate says it will cover any liabilities arising from TFS.

All Bates’ advisers have transferred to Honister Partners,while IFAs at Burns Anderson, Sage and Willis Owen have transferred to Honister Capital.

The management buyout will see investment vehicle Honister Capital run by former TMP chief executive Mark Lund while non-executive chairman Mark Tennant, chief financial officer Bryan Levine and non-executive directors Mark Holloway and Anton Simon will sit on the board.

Honister, which is backed by Peter Simon, founder and owner of the retail group Monsoon Accessorize, has been structured with no bank debt.

Simon stepped down as a non-executive director in April due to a potential conflict of interest caused by the fact he had expressed interest in TMP.

Lund says: “I am delighted that we have completed this transaction, which will allow our business to move forward on a solid and stable fin­ancial footing.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Bates Liquidation
    Well – what a great place to work if you’re an IFA.
    Westons liquidated in 1999 (thus dumping all their liabilities on the FSCS), the new Westons was then bought by BBB. BBB then went bust (was it £16m they owed?) – all liabilities to the FSCS again and the advisers start with a clean slate again under Bates.
    Now Bates go under and the advisers get the slate wiped clean again and move to Honister and any Bates related claims will again go to the FSCS to be picked up by the rest of the industry.
    In fact, as an adviser at the new company I imagine you could even get yor own client to complain about a bit of advice you gave them when yo worked under one of the previous guises and then get to invest the compensation payment and earn commission off it.
    How is it that these companies can, each time, take the cleitns and advisers of these liquidated firms, I imagine for nothing and then leave the liabilities on everyone else?
    If you’d wanted to buy the advisers and clients of Bates 6 months ago I’m sure you would have been parting with a considerable sum to do so. Why don’t the FSCS put a value on this transfer of assets and, as claims come in (if they do) claim back up to this “valuation” from the new company and then the new company can deal with the adviser accordingly. This situation of the rest of the industry picking up the costs in these situations needs to be stopped.

  2. Not so simple
    The FOS and the FSCS always said they would pursue the ultimate holding company, unless that falls over too. In 1985 Mike Fenwick predicted that eventually there would one firm left to pick up the compensation scheme tab. The only questions are when will that be and will it be a sole trader IFA? The Retail Destruction Review will squeeze out hundreds of firms and many will be dissolved so any claims will once again be piled upon the all too willing to pay out FSCS. The FSA is in need of a reality check.

  3. Not So Simple
    Hello Evan
    Thanks for taking an interest in this.
    Maybe we should make a Freedom of Information request to the FSCS to find out how many Westons and BBB claims they’ve paid out on and then find out how much of that they pursued Bates for.
    I reckon there will have been claims paid out by the FSCS but that Bates will not have been pursued for any of them.

  4. This stinks and
    I agree with Mike Jordan’s comments. If they walk away from the liabilities, they should be forced to walk away from all former clients of that company, not just those with a complaint……………. Take all or take none………… Why does the FSA allow this to happen?

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