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London DFM agrees with FCA to stop all regulated activity

In another development, two Organic-managed funds with more than £40 million worth of assets have been suspended.

London DFM agrees with FCA to stop all regulated activity

Discretionary fund manager (DFM) Organic Investments cannot carry out any regulated activity without the Financial Conduct Authority's (FCA) permission.

In another development, two Organic-managed funds with more than £40 million worth of assets have been suspended.

A note has now appeared on the front page of Organic Investment Management’s website that says: ‘The FCA has decided that from 5 p.m. on 7 December 2018, Organic Investment Management Limited (whether directly or through its agents) must not, without the prior written consent of the FCA, carry on any regulated activities, including managing investments.’

The firm’s FCA Register entry says that Organic must tell all financial advisers, platforms it uses, custodians of all assets managed by Organic and ‘the fund manager’, by 12 December that the DFM cannot carry out any regulated activity without the FCA’s consent.

The FCA permission restriction also says Organic ‘must secure all books and records and preserve information and systems relating to regulated activities’ and that these records ‘will be provided’ to the FCA ‘promptly on its request’.

An asset transfer requirement has also been placed on the firm so that it cannot ‘dispose of, deal with or diminish the value of any of its assets’ without the FCA’s consent.

The latest permission restriction follows an earlier FCA requirement on the firm in July 2017 that said it could not manage investments for new money. But this latest requirement is much more comprehensive and means Organic cannot manage investments for any of its existing assets under management.

When contacted by New Model Adviser® the firm declined to comment.

The permission restriction follows a number of other DFMs also facing similar FCA restrictions over the past two years.

Fund suspensions 

At the time of last summer’s permission restriction, New Model Adviser® saw a note sent to Organic’s advisers that said it would 'continue to manage the current assets under management in our model portfolios and separately the Organic funds' – although it could not take money into its model portfolios.

According to its website, which has now been changed, Organic provided managed discretionary and model portfolios.

The factsheet for the aggressive portfolio listed the Organic Bond fund and the Organic Long/Short Alpha fund as among the assets that ‘can constitute the target portfolios’.

The website also said: ‘Organic Investment Management is the investment manager to the Organic Bond fund and the Organic Long/Short Alpha fund. These funds are both domiciled in Ireland and are managed by European and Global Investors and are sub-funds of the Multi-Manager UCITS Platform fund.’

But it appears these funds have also now run into difficulties, as they have been suspended.

In a note, European and Global Investments said on ‘14 November 2018 the board of the Multi-Manager UCITS Platform Fund Plc decided to suspend the issue, valuation, sale, purchase, redemption or conversion into all the active classes of the Organic Bond Fund and the Organic Long Short Alpha funds.’

New Model Adviser® contacted European and Global Investments, which runs the Organic funds and is based in Dublin, to ask about the fund suspensions, but the firm did not respond.

According to European and Global Investments' website, the Organic Bond fund had £32 million in assets and the Organic Long/Short fund had £9.3 million in assets.

The FCA declined to comment further.

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