Mortgage broker John Charcol and the financial adviser arm of Towergate Group, both recently spun out of the embattled insurance group in a management buyout, are to receive a cash injection from the new owners to fund expansion and split the two units financially.
Today (17 March) it was announced that Towergate’s financial planning business will unveil a new brand in the coming weeks, while John Charcol will continue to trade under the brand it has built over the last 40 years.
In addition to funding the initial purchase price of £8.64m for the two businesses, Palatine and bosses have ploughed in additional funds of more than £5m to make a total investment of £14m to work towards the financial separation, investment in growth and the improvement of systems.
Management revealed they plan to invest heavily in new IT and back office systems, as well as bolstering existing routes to market and building new ones.
Palatine has backed incoming executive chairman Ian Darby, who previously ran the two businesses before moving to Aviva Life in 2011, and the existing management team of both businesses in the management buyout.
The John Charcol team will now be headed up by Simon Knight as chief executive, with further senior appointments to both teams expected to be announced very shortly.
Mr Knight begun his career in the mortgage industry with John Charcol in 1987 before moving on to head up lender GMAC-RFC.
The pair join the incumbent teams led by Warren Page, who handles financial planning, and Walter Avrili, who deals with John Charcol.
Mr Page has led both the financial planning and mortgage broking businesses since 2012 and will continue as chief executive of the financial planning business. Mr Avrili joined John Charcol in 1984 and became managing director of the business in 2010.
Mr Darby said: “The market opportunities available to both businesses are significant and we look forward to capitalising on these over the next few years.”
Earlier this month, it was revealed that as part of the agreement, Towergate will retain responsibility for any “historic regulatory liabilities”, including up to £85m of consumer redress arising out of past business reviews into enhanced transfer values and unregulated investments.
Last month’s preliminary financial results for 2014 revealed that independent file reviews for both investigations are ongoing and it is in continued talks with the Financial Conduct Authority, with up to £85m set aside for potential redress costs for past recommendations.
emma.hughes@ft.com
