Honister Capital has gone into administration after it failed to secure professional indemnity insurance.
Grant Thornton has been appointed administrator for the group, which includes advisory firms Burns Anderson, Sage Financial and Honister Partners and its subsidiary B-A Financial Limited. Honister Capital has over 900 self-employed financial advisors across the brands and 190 back office staff.
In a note sent to advisers this morning, seen by Money Marketing, chief executive Colman Moher says advisers are no longer able to write new business, with immediate effect.
Honister Capital Holdings will continue to operate direct-to-consumer business Willis Owen, which will be unaffected by the move.
In the note to advisers, Moher says: “Due to the history of some of our businesses, we have been exposed to large claims relating to business written by advisers who have long since left us and this has severely affected the premiums we have had to pay. The extent of policy excesses and exclusions has compounded this.
“It is with great regret and sadness that we have to inform you that we have been unable to obtain PII cover for the coming year which means that Honister Capital Limited and its subsidiaries will be unable to trade from today. The business has had no choice but to enter into Administration and consequently you are no longer able to write new business with immediate effect.”
The note says all employees face immediate redundancy, with the exception of certain staff who will be retained on full pay to effect an orderly wind down.
The administrator’s representatives are holding meetings with advisers today and tomorrow at 10am to outline details of their redundancy packages.
Nigel Morrison, Alistair Wardell and Richard White of Grant Thornton have been appointed joint administrators of Honister Capital.
Morrison says: “It is unfortunate that the only course of action possible in this situation for the Group is an orderly wind-down.
“No customer should be disadvantaged as the group does not hold client monies, although I would urge any customer who has paid for but not yet received a financial product to contact the product provider in due course.”
In February, Honister Capital chief executive Richard Pearson announced he was leaving the firm after less than a year in the role. Group chief financial officer Moher replaced Pearson in April.
In August, Honister announced it was cutting staff in a bid to reduce its operating expenses as a result of increased regulatory and trading costs and in January, Honister reassured investors that it will be able to meet its liability costs this year in a solvency statement filed to Companies House.
A Willis Owen spokesman says: “Willis Owen and its clients are unaffected by an entirely separate part of the overall Honister Capital Holdings business being placed into administration.
“We are a directly authorised and regulated business with the FSA and will continue to operate as normal. We can assure investors that trading continues as normal via the Willis Owen platform.”
Honister Capital was formed in June 2009 when it acquired the principal advisory and direct businesses of The Money Portal Limited in a move that saw the rest of The Money Portal, including national IFA Bates, go into administration with debts of £55m.
The Money Portal acquired execution-only business Willis Owen and national IFA Bates Investment Services in 2003 and Berkley Berry Birch subsidiary Weston Financial Planning in March 2006, as BBB went into administration.
The firm took on Millfield Partnership Limited and the Sage network in July 2006 for £10.5m, with the rest of Millfield placed into administration.
Honister Capital has provided two helpline numbers for affected advisers, which open at 11.30am today. Advisers can call 01482 385385 or 01625 667000 if they have any questions about the firm’s administration.