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7IM and LGT Vestra scoop £60m as embattled IFA shutters DFM

7IM and LGT Vestra scoop £60m as embattled IFA shutters DFM

Embattled advice firm Greyfriars Asset Management has closed its discretionary fund management (DFM) business with around £60 million moving to Seven Investment Management (7IM) and LGT Vestra, Wealth Manager sister site New Model Adviser® reported.

News of the DFM closure comes as the firm continues to face a section 166, or skilled person review, requested last year by the Financial Conduct Authority (FCA). Greyfriars has acknowledged this review could possibly lead to a fine or client refunds.

Founded in 1989 Leicester-based Greyfriars is an advice firm, Sipp and SSAS administrator and was formerly a DFM for its advisers and external IFAs.

In October 2016, Greyfriars came to an agreement with the FCA to stop accepting new money into its discretionary Portfolio Six which it says ‘was largely utilised by external IFAs’.

An investigation by New Model Adviser® found many of the investments within Portfolio Six were unregulated overseas property-based corporate bonds. At least one of these underlying P6 investments has since gone into administration, New Model Adviser® understands.

Now Greyfriars has announced it has also wound down its traditional DFM business run for its own advisers which had around £80 million of assets and consisted of Portfolios 1-5. 

Gareth Roberts, a partner at Greyfriars, said in March 2017 the firm made the ‘commercial decision to conduct an orderly wind down of its traditional DFM service’ which finished a year later.

‘In order to fully assist the clients we anticipated that this project could take up to 12 months and we finally ceased the DFM service on 31 March 2018 and therefore as we no longer needed those permissions we applied to cancel them,’ he said.

Roberts said the firm worked ‘closely with the FCA’ and decided to offer an advised solution for its clients to move them to portfolios run by LGT Vestra or 7IM.

He said 92% of the clients kept Greyfriars as their advisers and out of those three quarters opted to move to the 7IM platform using either a LGT Vestra model portfolio, a 7IM model portfolio or a combination of the two.

Verona Smith, head of platform at 7IM, said Greyfriars went through a ‘detailed due diligence process’ to select 7IM and the transition has been handled well.

‘Greyfriars has developed a good client focused solution and critically the transition of clients to this new solution has been handled in an extremely professional manner by all parties,’ she said.

Possible fine

In its latest set of financial statement Greyfriars said the section 166 review is still ongoing. This has ‘resulted in higher than normal costs in respect of professional fees and a consequential lowering of profits’. The firm made an operating profit of £166,302 for 2017 down from £779,205 the year before.

The firm said it is in stage two of four of the S166 review, carried out by KPMG, and no ‘client redress has been agreed’. However the firm does say the review could potentially lead to ‘unquantifiable fines, the potential for removal of permissions and the potential for requiring immediate refund on Greyfriars advised P6 assets’.

The firm’s accounts refer to 68 advised clients which have been ‘considered for a potential refund of investment’.

When asked if Greyfriars has estimated how much it expects to pay out, Roberts said: ‘It would be imprudent to try and guess at matters which are by definition uncertainties and beyond their control’.

When asked what is happening to the P6 portfolio, Roberts said: ‘In October 2016 Greyfriars took the decision to close their P6 Service. This service was largely utilised by IFAs and only a small proportion of Greyfriars clients used this service.’

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