The move opens the door to investors to claim compensation from the FSCS over losses due to the failed firms.

The advice firms declared in default were Cowley & Miller Independent Financial Services; Smith, Law & Shepherds and County Capital Wealth Management.

Glasgow-based adviser Cowley & Miller Independent Financial Services stopped trading in December 2021. It was placed under an asset restriction by the FCA in June 2021. The firm offered pensions, investments, mortgages and protection advice.

Cowley & Miller has also been subject to a pre-sale of review of any pension transfers by the FCA since 2018.

Bolton-based IFA Smith, Law & Shepherds was placed in administration in January this year. The firm was founded in April 2009 and at the time of liquidation had two directors Daniel Clough, and IFA Christopher Paul Dwyer.

Smith, Law & Shepherds (FRN 719232) has 20 claims in progress, all for pension transfer advice. Some of these relate to British Steel Pension Scheme (BSPS) transfers.

At the time of liquidation in January, the IFA’s administrator estimated total assets available for creditors of the firm to be £696,837 including directors loans of £336,837 and a pre-packaged client bank sale of £360,000 in forms submitted to Companies House.

Birmingham-based County Capital Wealth Management was founded in 2007 and at the time of liquidation had one director, IFA Mark Antony Abley. The wealth manager also traded as The Pension Review Service, Fathom until 2019 and went into voluntary liquidation in May 2020.

In March the wealth manager’s administrator estimated total assets available for creditors of the firm to be £497,911. The document submitted to Companies House by the administrator on 29 March listed compensation to “consumer creditors for advice” as £650,000, leaving the firm with a deficiency of £152,189.

County Capital (FRN 463679) has 68 claims against the firm, all in progress, and all for pension transfer advice. Some of these claims also relate to BSPS transfers.

The five firms to enter default were:

• County Capital Wealth Management Limited t/a The Pension Review Service, Fathom (FRN 463679) Prosperity House, 1 Barnfield Road, Spennymoor, County Durham, DL16 6EB
• Cowley & Miller Independent Financial Services Ltd (FRN 550002), 152a High Street, Irvine, Ayrshire, KA12 8AN
• Curzon Capital Limited (FRN 191520) 10 Brick Street, London, United Kingdom, W1J 7HQ
• Smith, Law & Shepherds I.F.A Limited (FRN 719232), 209 Liverpool Road, Birkdale, Southport, Merseyside, PR8 4PH
• Tradenext Ltd (FRN 573464), 54 Ethelbert Gardens, Ilford, IG2 6UN

The number of firm failures has dropped from earlier this year. In April and May 11 firms were declared in default by the FSCS, including four advice firms.

Sarah Marin, chief customer officer at the FSCS, said "In 2021/22, we helped 108,838 customers get back on track by either paying them compensation or enabling them to transfer to a new provider for their investment or insurance policy. While the number of firm failures has reduced, the total compensation amount is forecast to increase as claims volumes and values per firm rise."