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DFM placed into insolvency after FCA investigation

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A troubled discretionary fund manager has been declared insolvent after the FCA expressed concerns over the future of client assets.

The regulator applied to the High Court to place Beaufort Securities Limited and Beaufort Asset Clearing Services Limited into insolvency after assessing the firms’ finances.

The regulator had previously limited the London-based DFM’s permissions so that it could not take on new business, and required FCA permission before acting on IFA instructions.

In a stock exchange announcement this morning, the FCA said it had now ordered the firm to cease all regulated activity and not to dispose of any client assets without its consent.

PricewaterhouseCoopers has been appointed as the administrators.

The FCA says it “considers it necessary for insolvency practitioners to take over the running of the firms in order to protect assets from dissipation and protect the customers of both firms”.

Inside a DFM administration

The collapse comes on the back of another London-based DFM, Strand Capital, last year, over which the Financial Services Compensation Scheme says it expects to pay out at least £6m in compensation.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Did IFAs use this firm? After all it was supposed to be a DFM.

    If they did it rather begs the question of advisers due diligence processes. How many so called DFMs are flaky?

    From what I have seen the great bulk are cowboys. Want a decent DFM – go to a proper, well established private client stockbroker.

  2. More to the point Harry is whether the inevitable FSCS compensation bill will just be shared amongst the investment provider class or whether they will declare that the fault lies with the advice provided by IFAs who recommended clients to these DFMs and share the bill amongst us!

    • Very regrettably Kevin I can’t see how advisers who used this firm can avoid blame. Why did they choose them? What was the financial reward for recommending them?

      I’m afraid, as I see it, they are up to their necks.

      As I have often repeated if you can’t do it yourself stay out of investments.

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