FCA position on phoenixing

Following the decision of the administrators of Berkeley Burke SIPP Administration Ltd to discontinue the appeal of a High Court judgment on a judicial review of a FOS decision against the firm, the FCA took the opportunity to issue a statement reminding SIPP firms of their due diligence obligations when accepting investments.

A couple of paragraphs in the statement caught our eye:

“If a firm pursues a sale of part or all of its business or assets, it should pay due regard to its implications for customers who may have compensation claims. We expect all directors, as well as complying with the relevant provisions of the FCA Handbook, to comply with their statutory and non-statutory duties. These include, where a firm is at risk of insolvency, their duties to creditors, such as customers to whom compensation is or may be due.

In assessing any future regulatory applications, including applications for individuals to hold (or resume holding) FCA-approved roles, we will take into account how those individuals have acted in the context of the considerations outlined …”

The FCA has been criticised by advisers in recent years for not doing enough to prevent phoenixing type practices. But there have been a number of indications that this activity is firmly on the regulatory radar. The statement is a further indication that firms and individuals might find it increasingly difficult to pursue these practices.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

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Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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