Strabens Hall claims PI payout ends insolvency threat

Added 6th June 2016

International IFA firm Strabens Hall says it no longer faces "inevitable insolvency" due to £1m in claims over ill-fated investments in the collapsed Connaught Income funds after reaching an agreement with its professional indemnity insurer.

Strabens Hall claims PI payout ends insolvency threat

The statement was in response to an FCA final note, published on 19 May, which highlighted claims made by Strabens Hall that it was facing insolvency after racking up £1.05m ($1.4m, €1.3m) of liabilities to eight customers who complained to the Financial Ombudsman Service (FOS) about advice to invest in the unregulated Connaught Income Series 1 Fund.

A spokesperson for the company, which has offices in London and Hong Kong, told International Adviser on Monday that a settlement with its professional indemnity (PI) insurer for an undisclosed sum means Strabens Hall can "satisfactorily resolve" the liabilities in question.

FCA "aware" of deal

Strabens Hall said the FCA was “fully aware” of the changes to its status when it issued its “redacted” refusal to authorise a new business, Independent Family Advisers (IFAL), set up by the firm’s directors Adam Benskin and John Halley.

The firm said the FCA note had only covered a “phase of interaction” between the firm and the regulator from September 2013 to the end of February 2015.

“There have been significant developments in the period since then and Strabens Hall is able to confirm that these include the successful conclusion of the dispute with its professional indemnity insurer on a satisfactory basis for all parties concerned,” Strabens Hall said in its statement.

It is now “trading normally” and “meeting its full legal and financial” obligations, the company said.

When contacted by International Adviser, an FCA spokesperson said that although the regulator does not comment on individual cases, all firms are given access to any notices before they are published so that they can “make representations” about any issues or changes of circumstance. 

‘Phoenixing’

In a scathing judgement, the FCA had accused Benskin and Hally of ‘phoenixing’ – an administrative ploy of setting up a new entity to allow company directors to escape personally footing the bill for a failed firm’s liabilities.

In its application, IFAL requested permission to buy the advisory firm – including its assets, staff and clients – so it could pursue an ongoing legal dispute with its PI insurer.

“We wish to make clear that the sole purpose of seeking regulated status for IFAL was to ensure that Strabens Hall would be in a position to protect the best interests of all its clients including the small number involved in the investments in question covered by the notice,” said Strabens Hall.

Although contacted for comment, at the time of publication the FCA had not responded.

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FCA to apologise

Well, I guess these chaps can look forward to their £500 offer of compensation from the FCA for making irresponsible and defamatory comments in public, whilst in full possession of the 'actual' facts of the matter. Funnily enough exactly the way they treated George Patellis, the Chief Exec Whistle blower of the bank (REGULATED) that stole investors’ money with the full knowledge and sight of Capita and the FCA. It really is time that this shocking organisation was replaced altogether. True Regulation is about making advisers fully liable for the maleficence and unrestricted dishonesty of others ‘whatever the circumstances’. And then branding them unfit and proper as individuals, in organising themselves and their firm to protect their clients. I am sure many are completely disgusted by the sickening behaviour of the FCA and the FOS who act above the law with statutory immunity. Gordon Brown’s useless legacy. Innocent investors lose money by criminal means, IFA’s ruled against whatever the circumstances with failed PI provision are make insolvent, the FSCA says the IFAs did not cause the loss. The resultant merry go round is that the FCA ‘are very important and are seen to be acting decisively’, Chief of FOS seen to be ‘very important and strutting her perverted logic’ (at the FCA’s behest!), IFA’s who care are branded, losing their livelihood, and the criminals go free and unmolested still living in their £10 million mansions in Totteridge. Regulation really works!

Posted by: John6969, 07 Jun 2016

Congratulations

Now the rest of the industry can help you pick up the tab with increased premiums. Personally, I sincerely hope it doesn't stop here.

Posted by: Paul, 07 Jun 2016

Inevitable?

So that would be an evitable insolvency then, not inevitable at all, which it would appear has been evited.

Posted by: John stirling , 06 Jun 2016

About Author

Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.

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