Berkeley Berry Birch is winding up the shell of its national IFA firm and dumping its liabilities on to the Financial Services Compensation Scheme in a corporate reorganisation.
The move has provoked uproar among the IFA community who say BBB is offloading liabilities which will have to be picked up by other IFAs through the FSCS levy. The levy has risen in recent years and covers compensation claims on firms such as Towry Law subsidiary Advizas, RJ Temple and The David Aaron Partnership.
The BBB restructure sees assets – including clients and 150 advisers – transferred from Berry Birch & Noble Financial Services to the formerly dormant BBN Financial Planning. BBNFS has ceased trading and is being wound up along with all liabilities for current and future complaints and pension reviews. The FSCS says it is has no powers to stop the restructure.
The move comes with BBB undergoing due diligence over its proposed merger with Inter-Alliance to create the fourth-biggest IFA in the UK, with 2,000 RIs.
Hargreaves Lansdown chief executive Peter Hargreaves says: “Words escape me. They are asking the IFA community to pick up the tab for transactions they know nothing about.”
Durlacher analyst David Pannell says: “This will happen increasingly across the industry to all the medium-sized firms that are facing difficulty. Advisers will be brought out of the business and given new contracts and the liabilities will be left in the old company.”
BBB says it cannot comment on the move because of the merger discussions.