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FSA pledges tough line on phoenixing

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The FSA has warned that it will not tolerate phoenixing by Arch cru advisers seeking to ditch their liabilities and return to the market under a different firm.

The FSA published a policy statement on its Arch cru consumer redress scheme this week.

Under the amended scheme, firms have to write to clients who were recommended Arch cru and clients have to opt in to have the advice reviewed.

The regulator estimates that between 550 and 600 adviser firms sold Arch cru.

It says around 110 of those firms have already cancelled their permissions and it expects up to 100 more firms to default as a result of the opt-in scheme.

FSA head of investment intermediaries Linda Woodall says the regulator will monitor any attempts by Arch cru advisers to force liabilities onto the Financial Services Compensation Scheme and return to the market.

She says: “We have got measures in place on our system.

“If they start to come back into the industry, we will be able to make reference to intelligence on those people.”

Technology and technical founder and director Kim North says: “The FSA needs to keep a very close eye on advisers who purposefully try to avoid their liabilities by phoenixing.

“It is also something that accredited bodies should be mindful of when issuing statements of professional standing.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Why now? Limited Company firms have been doing this for years, quite probably starting (on a large scale) in the aftermath of the last great hindsight witch hunt, namely the Pensions Review. Then again, being quick off the mark has never been the FSA’s forte, has it?

  2. It should be simple. If you still have outstanding regulatory debt from a previous incarnation, you don’t trade again until it is settled. I, for one, am sick of picking up the tab for the miscreant behaviour of the less honourable. Seeing them return (probably to re-offend in some way or another) merely adds insult to injury.

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