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FSA investigates BIA on whole-of-life sales

Berkeley Berry Birch network subsidiary Berkeley Independent Advisers is being investigated by the FSA over the suitability of whole of life and regular savings plan sales.

The products were sold between December 1, 2001 and September 27, 2004 and represent a total of 3,150 sales. BIA has since suspended sales of these products pending a detailed analysis and review of the issues raised by the FSA.

IFAs are not surprised that problems are emerging over the sale of whole-of-life products as they believe it is a risky product to sell correctly. They are predicting further problems for advisers in this area.

Group finance director Craig Butcher says: “We are taking the issue seriously and are putting a lot of resources into our rev-iew and co-operating fully with the FSA. Our aim is to ensure that we operate to the highest standards across the group and within the network.”

Life Policies Direct managing director Jason King says: “Whole of life is a pro-duct we have always steered clear of and I think more trouble will emerge.”

Bloomsbury Financial Planning managing director Jason Butler says: “There is a problem with whole of life if it is used as a savings vehicle as it should only be used as a means of providing sufficient cash on second death to meet IHT requirements. I think this is the tip of the iceberg with regard to whole of life.”

The administrator of Network 300 is recommending an investigation into the transfer of money out of the company.

BDO Stoy Hayward partner Tony Supperstone says whoever becomes liquidator at this week’s creditors’ meeting should look into where monies – including received commissions – have been transferred.

Former Network 300 advisers are pursuing legal action against Group 300 directors, claiming that they withheld commission owned by network members to finance a US teleconferencing company.

Ex-members are also concerned that the transfer of the assets of Network 300 to Thinc was made at an undervalue.

In January this year, Group 300 chief executive Chris Batten formed a company in the US providing teleconferencing services called Group 300 Inc.

Batten bought a Pittsburgh-based office which members say was furbished at significant cost. He then appointed a marketing agency and legal representation and a sales team of five people.

Batten admits Group 300 invested money in the US business, a large proportion of which he says was used to buy hardware that was then used by Network 300.

BDO Stoy Hayward partner Tony Supperstone says: “I cannot give any comment on whe-ther Network 300 was undervalued when it was sold. That is a matter for myself and the creditors to decide. I am not satisfied about the transfer of monies out of Network 300 and that is a matter for a liquidator.”

Batten says: ‘With regard to commission, myself and Pete Garlick have huge sympathy for any losses that have been caused by the business being put into administration due to unrealistic time-scales and pressures from the FSA based on their concerns about the treatment of intangible assets and the sudden desertion of directors to a new business.”

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