The Financial Services Authority has warned Independent Financial Advisers and brokers that it will not tolerate 'phoenix' firms attempting to shirk their responsibilities by moving assets between companies. A 'phoenix' firm comes about when the assets of one limited company are moved to another legal unit, sometimes at a price below their true market value, without moving the liabilities or meeting liabilities with consumers. Some or all the directors are the same in both units. The FSA has recently investigated 18 potential phoenix firms, and has referred one firm to enforcement.
Our view
At last, a stand on advisers who leave the rest of the industry to pick up the pieces of the mess and liabilities that they leave behind and then just start up again with no liabilities.