A Cardiff-based advice firm is set to close after the Financial Conduct Authority (FCA) said recommendations to invest in discretionary fund manager (DFM) Beaufort Securities were ‘unsatisfactory’.
The firm's director has told our sister publication New Model Adviser® Grosvenor Butterworth initially suspended its advice on pension switches and transfers while a section 166 review was completed in June.
A section 166, or skilled person review, means a firm must appoint a third party to review practices if the FCA is ‘concerned or wants further analysis… about aspects of a regulated firm’s activities’.
A further note on the firm's FCA register entry appeared in the past two weeks saying the firm must stop all regulated activity until the section 166 is complete.
The firm must also end all ‘relationships with all introducers, other than professional firms such as solicitors and accountants’ until the review has been completed, the permission restriction said.
Tony Cuming, director at Grosvenor Butterworth, told New Model Adviser® the FCA asked the firm to give up the permissions.
‘They made it very clear that if I did not volunteer they would take them anyway. They suggested that the advice we gave to use Beaufort [Securities] was unsatisfactory in all cases and this was the reason for the permissions issue,’ he said.
He added issues began following recommendations to use DFM Beaufort Securities, which has also faced a number of FCA permission restrictions this year. Clients were moved out of portfolios which matched their attitudes to risk by the DFM he said. Beaufort Securities declined to comment.
News of the firm’s closure follows Beaufort Securities writing to clients encouraging them to use a claims firm to claim against their IFAs over recommendations to invest through the DFM.
Cuming said the firm will now close.
‘The FCA has effectively cut off the oxygen to the business. Like anything else, if you cut off the oxygen it dies,’ he said.
He added the firm has received a 'large number of complaints' through four claims management firms.
Until several weeks ago, a firm called BluePrint Industrial Engineering had a link (now removed) to Grosvenor Butterworth on the bottom of its website. BluePrint Industrial Engineering is a Nordic-based engineering business which has listed 10 million 7.5% five year bonds on the Cypriot Stock Exchange. BluePrint was unavailable for comment.
Cuming said his firm was introduced to BluePrint by Beaufort Securities.
The FCA and Beaufort declined to comment.