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Berkeley Berry Birch has 12m capital gap

Berkeley Berry Birch needs to plug a capital resource requirement deficit of 12m to stop the FSA potentially cancelling permission for its subsidiaries to act as IFAs.

The figure, revealed in the firm’s results on Friday, is significantly higher than the 2.4m deficit stated in April when the FSA said it was enforcing a formal timetable to deal with it. The results also state the “fundamental uncertainty” of the group continuing as a going concern because of the FSA commencing regulatory enforcement action.

Cliff Lockyer is stepping down as chairman but remains chief executive of the group which has 740 registered individuals, of which 450 are in the BIA network arm.

Lockyer says the FSA has made “positive sounds” about issuing a waiver regarding capital adequacy rules to reduce the deficit to 6m. He says a restructure of the business should reduce the deficit to around 3m, which will be found through outside investment from providers BBB is currently in talks with.

The investigation into the liquidation of BB&N Financial Services has ended after BBB made a payment of 600,000 to the liquidator without accepting liability.

Lockyer says the investigation into the suitability of whole of life and regular savings plan sales by BIA is close to conclusion, with 1.4m being set aside for the review and FSA fine.

Lockyer says: “I have had the most horrific year but it can only get better with the end of these two investigations.”

Bestinvest business development manager Justin Modray says: “BBB is in a difficult position and if they cannot get capital fast, it is hard to see how they can continue.”

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