A Financial Conduct Authority (FCA) investigation helped push international adviser firm deVere UK to a £1.2 million loss in 2017.
Financial statements filed at Companies House revealed the company's pre-tax losses up from £864,700 in 2016.
In a statement deVere said the loss was partly a result of an FCA 'investigation' into what it describes as 'a discrete area of work the business was undertaking and no longer carries out’ which led to ‘significant costs’.
It added that in January 2018 the regulator told the company its investigation into this ‘discrete area’ of its business would continue.
At the time of publication the company had not yet responded to a request for comment by Wealth Manager sister title New Model Adviser on whether the investigation is ongoing or which part of the business is being referred to.
DeVere warned it may not be able to meet the costs of the FCA review over 2018 but said it has been provided with extra capital from its parent company to cover costs.
‘The review being carried out by the FCA will involve funding that the company is unable to meet
‘As a result the business is reliant upon ongoing financial support from its parent company. We have received confirmation from deVere Group Limited GmbH that costs associated with the FCA review will be met via the receipt of additional equity capital as required.
‘As a demonstration of parental ongoing commitment, £875,500 for new equity was received into the company during 2017.’
As well as the FCA investigation deVere cited ‘extensive recruitment costs’ caused by ‘support staff rationalisation plans during the year' as reason behind the £1.2 million loss. It also said that it has written down the value of unregulated investments it held as a result of 'settling historic client compensation claims'.
deVere UK was issued with a section 166, or skilled person review, by the regulator in February 2017.
This review, which was carried out by KPMG, related to ‘activities surrounding the production of defined benefit pension transfer reports’, the firm said. The firm said KPMG finished its report during 2017 and ‘the business has implemented their recommendations’.
In early 2017 deVere
The firm said its decision to stop its pension report writing service in 2017 contributed to its revenues dropping from £3.1 million to £2.2 million.