Last week, moneymarketing.co.uk revealed KFM was heading for liquidation after Kilminster sent a letter to creditors, setting a meeting next month to appoint a liquidator.
Minority KFM shareholders and ex-Kilminster advisers, who claim they could be owed hundreds of thousands of pounds in trail commission, are upset about the terms of a deal KFM struck with fellow network Alpha 2 Omega in January. KFM advisers were offered the chance to transfer to A2O, with over 20 advisers taking up this opportunity.
As part of the deal, Malcolm Kilminster’s own practice became an appointed rep of A2O and Kilminster became an A2O director. It was also agreed any residual income from KFM, including trail commission, would pass to Kilminster’s own practice if KFM ceased trading.
Malcolm Kilminster was understood at the time to have received £265,000 up front for selling the “goodwill” in his own practice with a further £50,000 in six months and another £50,000 in 12 months.
At the time, a spokesman for Kilminster said KFM would continue to trade.
Documents from a KFM EGM earlier this year show the network was facing two potential litigations totalling around £300,000. If it is liquidated, responsibility for claims could fall on the Financial Services Compensation Scheme.
A spokesman for law firm SP Legal says it has been instructed by a group of ex-Kilminster advisers to review the A2O deal.
The spokesman says: “We have been asked to review the transactions undertaken by Malcolm Kilminster in relation to assets purported to be his own but held under the agencies of the company.
“Our clients as creditors are looking to review the transactions to see whether the company has been deprived of assets which could have been used to meet their claims.”
Kilminster was unavailable for comment. A member of the staff says he began a five-week holiday in America last week. No one at A2O was available for comment.