An authorised advisory firm that is associated with 20Twenty Independent has taken on a number of staff and clients from the latter following its liquidation, FTAdviser can reveal.
According to a person with knowledge of the situation, Totus Capital, which is authorised and regulated by the Financial Conduct Authority, has taken on eight advisers and a number of clients that wished to continue to receive advice after 20Twenty entered creditors voluntary liquidation on 25 October.
According to the FCA register, 20Twenty, which is no longer authorised, includes among its trading names Totus, Totus Consulting and Totus Wealth Management.
The Totus.com website lists Totus Capital among a number of associated companies, including Totus Consulting, the trading name of 20Twenty. Most of these businesses, including Totus Capital itself, operate out of the same London address as 20Twenty.
Mr de Stefano is listed on the Totus website as ‘group managing director’ of the Totus Group and is also the former managing director of 20Twenty.
In a letter to clients dated 21 October, seen by FTAdviser, 20Twenty managing director Vince de Stefano confirms that 20Twenty is entering creditors’ voluntary liquidation, following advice from insolvency firm CMB Partners.
Mr de Stefano states that said the firm had seen its income fall “significantly” due to the “loss of its advisory team” and that PI cover and regulatory costs had also risen “as a result of regular attacks from claims management companies”.
The letter adds that if investors have an “eligible complaint” they may be entitled to make a claim on the Financial Services Compensation Scheme.
A director’s report and statement of affairs following a meeting of creditors on 25 October 2013, seen by FTAdviser, revealed the directors of the firm attributed its failure to increased restrictions and costs relating to its professional indemnity insurance.
The report says in 2009 the company started to receive complaints concerning the sale of two tax mitigation schemes from 2004 and 2005, due to the schemes “failing to deliver” on their objectives as HMRC had challenged associated tax reliefs.
In August 2011, 20Twenty’s PI insurer went into liquidation. The cover was renewed in October 2011, but the excess had doubled to £10,000 and the premium had increased to £77,000. There was a total exclusion for film partnerships, which was 20Twenty’s specialism.
In October 2012, 20Twenty was offered a syndicated PI policy with a £10,000 excess and a premium of £88,000, with product exclusions extended to include “geared film partnerships” and “unregulated collectives where there has been issues with liquidity”.
The report said that due to “continued increase in PI insurance and regulatory costs”, it had become difficult to attract new advisers and retaining existing advisers.
The report states 20Twenty is owned by Gibraltar-based Fawnwood Investments.
Earlier this year, 20Twenty was subject to a ruling from the Financial Ombudsman Service over complaints brought on behalf of five investors by Rebus Investment Solutions, a claims management company that specialises in complaints over complex investments.
The clients were awarded the maximum Fos award at the time of £100,000 after they were advised to invest in the Crossover Film Partnerships, promoted by Crossover Capital, but were not made ‘sufficiently aware’ by 20Twenty of the high level of risk inherent in the scheme, especially relating to loans that were ‘full recourse’ to the investor.
Rebus told FTAdviser at the time that the “unprecedented” case would involve a court claim against 20Twenty for £2.1m worth of alleged losses over and above the maximum Fos award.
A landmark ruling in the High Court in January of this year overturned the previous orthodoxy that accepted Fos awards are final when three investors were given the green light to pursue their adviser for losses of £500,000 despite having accepted a £100,000 award from Fos.
FTAdviser understands that the liquidator of 20Twenty is aware of a number of claims and is liasing with the insurer.
Mr de Stefano, 20Twenty and Totus Capital did not respond to repeated requests for comment.
