Monday, 19 January 2015 10:51
Takeover close for adviser network fined £12m and banned from hiring
The parent company of an advisory firm, which was fined £12m by the FCA and banned from hiring advisers last summer, is on the verge of being acquired in a £2.7m deal.
Financial Limited is the subject of the takeover bid from Tavistock Investments, an integrated financial services group.
Tavistock told the Stock Exchange that it has entered into a conditional contract to buy the holding company Standard Financial Group Limited.
The goal is to create a "large and profitable business...that combines both financial advisory and investment management services", Tavistock said in a statement.
The company's existing operations include Tavistock Partners, an independent financial advisory business, and Tavistock Wealth, an investment management business.
Tavistock directors said they believed Financial has robust systems in place, having addressed failings which led to an FCA fine of £12.5 million in July.
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FCA officials said last July they had "significant concern" about the firms' "inadequate systems and controls relating to the recruitment, training, monitoring and control of its appointed representatives".
Although the fine was waived due to financial hardship, the firm was banned from hiring any new advisers for 180 days – reduced to 126 days.
That ended on 26 November in "formal recognition by the FCA of the efforts & co-operation of Financial's new management team in dealing with the enforcement issues identified".
The directors of Tavistock believe the level of assets advised upon by members of the Financial network exceeds £2.6 billion.
They hope that many of Financial's current advisers will introduce Tavistock Wealth to a significant number of their clients.
Outlining the benefits of the deal to Tavistock, the Stock Exchange notice read: "As only a limited number of additional staff would be required by Tavistock Wealth in order to manage a much higher level of clients' assets in its portfolios, it is believed that any meaningful penetration of Financial's present client base will result in a substantial increase in the group's profitability."
The directors said there would be a "substantial and immediate increase" in adviser numbers - from 23 to 324.
Customer numbers would rise to over 65,000 and gross turnover to over £30m.
The move will enable the company to "establish Tavistock as a national financial services brand" and "attract high calibre advisory firms and to complete other significant corporate transactions", the directors told shareholders.
Cheltenham-based Financial, founded in 2001, has about 300 individual advisers, with Tavistock estimating it is the seventh largest network in the UK. Its network generates gross annual revenues of some £28m and has over 60,000 customers.
The offer will be conditional on a number of matters, including the approval of the shareholders at the general meeting of the company to be held on 12 February.
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Financial Limited is the subject of the takeover bid from Tavistock Investments, an integrated financial services group.
Tavistock told the Stock Exchange that it has entered into a conditional contract to buy the holding company Standard Financial Group Limited.
The goal is to create a "large and profitable business...that combines both financial advisory and investment management services", Tavistock said in a statement.
The company's existing operations include Tavistock Partners, an independent financial advisory business, and Tavistock Wealth, an investment management business.
Tavistock directors said they believed Financial has robust systems in place, having addressed failings which led to an FCA fine of £12.5 million in July.
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FCA officials said last July they had "significant concern" about the firms' "inadequate systems and controls relating to the recruitment, training, monitoring and control of its appointed representatives".
Although the fine was waived due to financial hardship, the firm was banned from hiring any new advisers for 180 days – reduced to 126 days.
That ended on 26 November in "formal recognition by the FCA of the efforts & co-operation of Financial's new management team in dealing with the enforcement issues identified".
The directors of Tavistock believe the level of assets advised upon by members of the Financial network exceeds £2.6 billion.
They hope that many of Financial's current advisers will introduce Tavistock Wealth to a significant number of their clients.
Outlining the benefits of the deal to Tavistock, the Stock Exchange notice read: "As only a limited number of additional staff would be required by Tavistock Wealth in order to manage a much higher level of clients' assets in its portfolios, it is believed that any meaningful penetration of Financial's present client base will result in a substantial increase in the group's profitability."
The directors said there would be a "substantial and immediate increase" in adviser numbers - from 23 to 324.
Customer numbers would rise to over 65,000 and gross turnover to over £30m.
The move will enable the company to "establish Tavistock as a national financial services brand" and "attract high calibre advisory firms and to complete other significant corporate transactions", the directors told shareholders.
Cheltenham-based Financial, founded in 2001, has about 300 individual advisers, with Tavistock estimating it is the seventh largest network in the UK. Its network generates gross annual revenues of some £28m and has over 60,000 customers.
The offer will be conditional on a number of matters, including the approval of the shareholders at the general meeting of the company to be held on 12 February.
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Follow us on Twitter and get frequent news alerts @FPM_online.
Or follow Editor Kevin O'Donnell - @FPM_Kevin or staff writer James Nadal - @FPM_James.
For the latest Sipp, SSAS and retirement news visit our sister news site www.sippsprofessional.co.uk and on Twitter @SippsPro.
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