Brian Raven has revealed how his firm brokered a deal with the Financial Conduct Authority to rescue failing advice network Financial Ltd without taking on its liabilities.
A past business review into pension switching advice problems at Financial Ltd, ordered by the FCA in 2012, will be complete “within the next few months”, according to the Tavistock CEO.
But he stressed Tavistock, which bought Financial Ltd in February 2015, would not be affected by anything that came to light during the review process, in a deal with the regulator to avoid Financial Ltd’s total collapse.
He said: “When we rescued the business I said to the FCA we were more than happy and willing to do this, because frankly we had a business that’s going to go to the wall [Financial Ltd], so we will invest an amount of working capital, but we won’t expose our shareholders to historic liabilities.
“We reached an agreement with the regulator and we are 90 per cent of the way through that process. This has been a very long, drawn out process, but it is yesterday’s news.”
In August 2008, the regulator visited Financial Ltd as part of its thematic review of pension switching advice and found was a significant risk of consumer detriment as a result of weaknesses in the company’s systems and controls.
This led to the first review, but in 2012 the FCA found there was still a risk of unsuitable advice, prompting the second review, which is now nearing completion.
In September 2015 the FCA said that while actual loss to individual customers has not been fully quantified, high levels of potential unsuitability had been identified.
Two subsidiaries of Financial Group, including one of the largest adviser networks in the UK Financial Ltd, have
Financial Limited, Investments Limited and their parent company Standard Financial Group are now in liquidation, but have made payments to affected customers by way of redress.
Two of the group’s subsidiaries escaped fines of more than £13m from the regulator in the summer of 2014 for failing to have adequate controls in place over appointed representatives.
Charlie Palmer, the former chief executive of Standard Financial, was fined and banned from a significant influence function by the FCA last year.
Also last year, Tavistock announced plans to close down Financial Ltd and replace it with a new network, gaining regulatory approval in August, with the majority of members being transferred across.
Meanwhile, last month the company agreed to buy IFA firm Abacus Associates Financial Services for £5m and Mr Raven said there could be more acquisitions in the pipeline. “The emphasis is on quality rather than quantity, we don’t have any specific targets for adviser numbers or amounts of money under advice.
“I am sure we will buy more. We are looking at firms all the time, but I cannot really say any more than that because we are a public company.”
