Wealth manager forced into administration after court loss

Wealth manager forced into administration after court loss

A wealth management firm has entered administration after losing a court case brought by a client.

Full Circle Asset Management, which is based in Sevenoaks in Kent, entered administration on 27 December 2017.

As FTAdviser previously reported, Full Circle Asset Management was ordered by a court on 1 December to pay damages to one of its clients. The court found the company had failed to apply stop losses as agreed, and failed to keep its client in assets appropriate to their agreed risk profile.

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The court did not immediately calculate the amount of the damages to be paid to the client, but the client, David Rocker, took Full Circle Asset Management to court after his £1.5m investment fell by more than 50 per cent, alleging the losses were caused by the firm's breaches of the contractual terms over how it managed his money.

FTAdviser has since been contacted by another client of Full Circle Asset Management, who has made a claim to the Financial Ombudsman Service (FOS) about the firm. The Fos can order a firm pay redress up to £150,000.

A spokesperson for the Fos said that because Full Circle Asset Management is in administration, rather than bankrupt, it, rather than the Financial Services Compensation Scheme (FSCS), is liaising with the administrators of the business.

This is because, according to FOS, the fact that a company is in administration does not necessarily mean there are insufficient assets to cover liabilities. However if there are insufficient assets to cover liabilities as they fall due, then the claims could be moved to the FSCS, and any compensation costs will then be borne by the entire industry of investment advisers.

The Fos emphasised that if there are others who wish to make a claim against Full Circle Asset Management, then they should contact the Ombudsman service as opposed to the Financial Services Compensation Scheme (FSCS). 

In a statement, PCR, the administrators of Full Circle, said all client money is in segregated accounts and so not in jeopardy.

The administrators added it is their intention to sell Full Circle Asset Management as a going concern, and that the existing investment management team have been retained to provide “continuity” for clients of the firm.

FTAdviser has approached Full Circle Asset Management for comment.