FCA - loss of supplementary income

phillw

dunstonh said:
But that is to stop the regulated firm from disposing of assets.  It shouldn't affect a consumer.

Where would they get the money from to pay the consumer?

dunstonh

phillw said:

dunstonh said:
But that is to stop the regulated firm from disposing of assets.  It shouldn't affect a consumer.

Where would they get the money from to pay the consumer?

The regulated firm doesn't pay the consumer out of the firm assets.

There have been cases in the past where shareholding directors have been known to sell assets and draw them out if they get wind of regulatory issues coming that are likely to lead to fines or customer redress.    That leaves the firm with no assets that can be used to cover the redress/fines and the firm goes into administration and dumps all the claims onto the FSCS.          Often, in the past, those dodgy directors would set up again on a new company (known as phoenixing).

The FCA have tried to cut phoenixing down and they put orders on firms with issues which are likely to lead to redress/fines to block the release of assets/balances out of the company.

The FCA cannot block consumers as consumers are not regulated by the FCA.    The block on assets/values for directors/shareholders wouldn't affect consumers for income purposes as income isn't paid out of firm money.

Scappat

wmb194 said:

Scappat said:

Is it lawful for the FCA to block access, for an unspecified time, to investments that provide a monthly income which is necessary to pay bills, buy food etc?

What are you referring to? Can you give specifics or is this just a hypothetical?

My investments are with a small independent company which paid to use the back office services of a company called Wealthtek, which is now in administration. All transactions has been blocked so I no longer have a monthly income deriving from those investments and I am getting to the point where I can’t meet my expenses. I rent, so the pressure is real. 

wmb194

JamesRobinson48 said:

Googling Wealthtek, I perceive that the FCA has intervened in an effort to assist retail investors who might have been a victim of criminality. Also it seems questionable whether Wealthtek held regulatory permissions to hold client money. I trust all the above would be very evident online to OP also.

OP says "My investments are with a small independent company".  Obviously none of my business, but it would be interesting to know whether that "small independent company" is truly independent, or is it controlled by or connected to the same person who controlled Wealthtek?   Is OP sure that the "small independent company" itself holds regulatory permissions for the activities that OP has been using it for?  And finally, how did OP come to be using that "small independent company"?  I'm wondering if possibly OP might have been scammed from start to finish.  For example, did OP get an unsolicited approach from the "small independent company" to invest in the first place?  Were these genuine investments in reputable businesses, or was it perhaps entirely fraudulent from the moment OP first paid his cash away?  Granted, hitherto OP was being paid a monthly cash flow, but I gather that would not be uncommon in such schemes.  I hope I am not being too suspicious or alarmist in fearing the worst.

As an example, Google threw up the asset manger linked below with a page on what's been happening and it appears to be genuine. There appears to be an administration process underway so I wouldn't leap to too many conclusions about whether the OP's AM is also a scam just yet. As we saw with SVS though, these things can take a long time to resolve themselves.

https://www.stellar-am.com/wealthtek/

masonic

dunstonh said:

phillw said:

dunstonh said:
But that is to stop the regulated firm from disposing of assets.  It shouldn't affect a consumer.

Where would they get the money from to pay the consumer?

The regulated firm doesn't pay the consumer out of the firm assets.

There have been cases in the past where shareholding directors have been known to sell assets and draw them out if they get wind of regulatory issues coming that are likely to lead to fines or customer redress.    That leaves the firm with no assets that can be used to cover the redress/fines and the firm goes into administration and dumps all the claims onto the FSCS.          Often, in the past, those dodgy directors would set up again on a new company (known as phoenixing).

The FCA have tried to cut phoenixing down and they put orders on firms with issues which are likely to lead to redress/fines to block the release of assets/balances out of the company.

The FCA cannot block consumers as consumers are not regulated by the FCA.    The block on assets/values for directors/shareholders wouldn't affect consumers for income purposes as income isn't paid out of firm money.

The most prominent example of enforcement action affecting members of this forum was DotComUnity credit union, which in 2014 launched a table-topping cash ISA, but the following year was put under restriction due to having insufficient capital reserves. This included imposing a block on the firm reducing its capital reserves, which had the effect of preventing customer withdrawals and ISA transfers out. It took several months for it to be officially declared insolvent and for FSCS to spring into action. The whole of this time, consumers had no access to their money and no recourse.

Scappat

dunstonh said:

Scappat said:

Is it lawful for the FCA to block access, for an unspecified time, to investments that provide a monthly income which is necessary to pay bills, buy food etc?

Context needed.

The FCA doesn't block access to a specific individual.    It will suspend an investment at the fund house level or distributer level. 

AFAIA, there are no mainstream investments currently in suspension.

My investments are with a small independent company which paid to use the back office services of a company called Wealthtek, which is now in administration. All transactions has been blocked so I no longer have a monthly income deriving from those investments and I am getting to the point where I can’t meet my expenses.…

Scappat

JamesRobinson48 said:

Googling Wealthtek, I perceive that the FCA has intervened in an effort to assist retail investors who might have been a victim of criminality. Also it seems questionable whether Wealthtek held regulatory permissions to hold client money. I trust all the above would be very evident online to OP also.

OP says "My investments are with a small independent company".  Obviously none of my business, but it would be interesting to know whether that "small independent company" is truly independent, or is it controlled by or connected to the same person who controlled Wealthtek?   Is OP sure that the "small independent company" itself holds regulatory permissions for the activities that OP has been using it for?  And finally, how did OP come to be using that "small independent company"?  I'm wondering if possibly OP might have been scammed from start to finish.  For example, did OP get an unsolicited approach from the "small independent company" to invest in the first place?  Were these genuine investments in reputable businesses, or was it perhaps entirely fraudulent from the moment OP first paid his cash away?  I hope I am not being too suspicious or alarmist in fearing the worst.

  My investments are handled by a financial advisor who has worked with my family since the 1980s so I was not subject to a scam. My assets are ring fenced in a guardian bank. I am not a client of Wealthtek. My position is similar to clients of Stellar. Neither the FCA nor BDO - the Special Administrators - care that people have been deprived of their income since April and there is no indication of when access might be restored. Can it really be lawful to do this? 

masonic

Scappat said:

dunstonh said:

Scappat said:

Is it lawful for the FCA to block access, for an unspecified time, to investments that provide a monthly income which is necessary to pay bills, buy food etc?

Context needed.

The FCA doesn't block access to a specific individual.    It will suspend an investment at the fund house level or distributer level. 

AFAIA, there are no mainstream investments currently in suspension.

My investments are with a small independent company which paid to use the back office services of a company called Wealthtek, which is now in administration. All transactions has been blocked so I no longer have a monthly income deriving from those investments and I am getting to the point where I can’t meet my expenses.…

Ouch, potentially £81.4m in client money gone walkies! Can't really blame the FCA for slamming on the brakes. I happen to have had previous dealings with Shane Crooks and Mark Shaw as they are working on the Collateral UK P2P administration in which the directors were recently jailed. They've actually managed to recover some of my money, which I was doubtful I'd ever see again. 

At least you have FSCS protection that will kick in eventually. But it is unlikely that you'll see any money in the short term, so you'll need to explore options to bridge what could be a gap of many months, especially given this insolvency will focus on money laundering and fraud.

masonic

Scappat said:

JamesRobinson48 said:

Googling Wealthtek, I perceive that the FCA has intervened in an effort to assist retail investors who might have been a victim of criminality. Also it seems questionable whether Wealthtek held regulatory permissions to hold client money. I trust all the above would be very evident online to OP also.

OP says "My investments are with a small independent company".  Obviously none of my business, but it would be interesting to know whether that "small independent company" is truly independent, or is it controlled by or connected to the same person who controlled Wealthtek?   Is OP sure that the "small independent company" itself holds regulatory permissions for the activities that OP has been using it for?  And finally, how did OP come to be using that "small independent company"?  I'm wondering if possibly OP might have been scammed from start to finish.  For example, did OP get an unsolicited approach from the "small independent company" to invest in the first place?  Were these genuine investments in reputable businesses, or was it perhaps entirely fraudulent from the moment OP first paid his cash away?  I hope I am not being too suspicious or alarmist in fearing the worst.

  My investments are handled by a financial advisor who has worked with my family since the 1980s so I was not subject to a scam. My assets are ring fenced in a guardian bank. I am not a client of Wealthtek. My position is similar to clients of Stellar. Neither the FCA nor BDO - the Special Administrators - care that people have been deprived of their income since April and there is no indication of when access might be restored. Can it really be lawful to do this? 

If what you write here is true, i.e. your assets are completely segregated from those implicated in the Wealthtek debacle, and Wealthtek / Vertem / Mallioch Melville are not acting as custodians for your assets, then there is no reason the actual custodian shouldn't find a way to transfer your income payments to you. They would no doubt have an obligation to do so, and if they cannot meet it, then that puts them at risk of going into administration. But based on what you have written, they should have been able to enlist the services of an alternative provider by this point.

So on your point of lawfulness, based on the above, the FCA and BDO have nothing to do with your dispute against the unnamed small independent company that owes you money. You could go through the formal complaint procedure and through to the Financial Ombudsman Service if necessary, or issue a statutory demand, take them to the county court and ultimately issue a winding up petition if what they owe meets the threshold for this.

Do you know the name of the custodian used by your small independent company?

Scappat

masonic said:

Scappat said:

JamesRobinson48 said:

Googling Wealthtek, I perceive that the FCA has intervened in an effort to assist retail investors who might have been a victim of criminality. Also it seems questionable whether Wealthtek held regulatory permissions to hold client money. I trust all the above would be very evident online to OP also.

OP says "My investments are with a small independent company".  Obviously none of my business, but it would be interesting to know whether that "small independent company" is truly independent, or is it controlled by or connected to the same person who controlled Wealthtek?   Is OP sure that the "small independent company" itself holds regulatory permissions for the activities that OP has been using it for?  And finally, how did OP come to be using that "small independent company"?  I'm wondering if possibly OP might have been scammed from start to finish.  For example, did OP get an unsolicited approach from the "small independent company" to invest in the first place?  Were these genuine investments in reputable businesses, or was it perhaps entirely fraudulent from the moment OP first paid his cash away?  I hope I am not being too suspicious or alarmist in fearing the worst.

  My investments are handled by a financial advisor who has worked with my family since the 1980s so I was not subject to a scam. My assets are ring fenced in a guardian bank. I am not a client of Wealthtek. My position is similar to clients of Stellar. Neither the FCA nor BDO - the Special Administrators - care that people have been deprived of their income since April and there is no indication of when access might be restored. Can it really be lawful to do this? 

If what you write here is true, i.e. your assets are completely segregated from those implicated in the Wealthtek debacle, and Wealthtek / Vertem / Mallioch Melville are not acting as custodians for your assets, then there is no reason the actual custodian shouldn't find a way to transfer your income payments to you. They would no doubt have an obligation to do so, and if they cannot meet it, then that puts them at risk of going into administration. But based on what you have written, they should have been able to enlist the services of an alternative provider by this point.

So on your point of lawfulness, based on the above, the FCA and BDO have nothing to do with your dispute against the unnamed small independent company that owes you money. You could go through the formal complaint procedure and through to the Financial Ombudsman Service if necessary, or issue a statutory demand, take them to the county court and ultimately issue a winding up petition if what they owe meets the threshold for this.

Do you know the name of the custodian used by your small independent company?

My financial advisor worked for Malloch Melville, which has been misleadingly labelled as a trading name of Wealthtek. I have spoken to the Financial Ombudsman and they can’t help as the company no longer exists. BDO have lead me to believe that my assets are safe. The guardian bank is Caseis. I have been told that I should try contacting them directly re an in specie transfer. 

£81.4 million is a rather large chunk and as Wealthtek was an FCA regulated company it seems that the FCA wasn’t doing a particularly good job of regulating.  The FSCS doesn’t kick in immediately and I can’t live on fresh air. Getting information out of BDO is like getting blood from a stone. But worse.