It is happening again. Berkeley Berry Birch, a national Independent Financial Adviser firm has decided to wind up one part of the firm and land all liabilities in the lap of the Financial Services Compensation Scheme. The FSCS is a compensation scheme to help consumers financially where their provider or adviser has gone out of business and they have received poor advice. The FSCS said they have no power to stop the move going ahead.
Our View
The FSCS is funded by a general levy on the rest of the financial services industry and we are getting sick and tired of the so-called ˜big boys" using the system to their advantage. What has been happening in the past (and is increasingly happening on a more regular basis) is for bigger companies to wind up their lower-performing operations and retain the clients and advisers. All liabilities are let go of and fall into the hands of the FSCS, letting the financial burden of their liabilities rest on the industry, rather than where they should be - with themselves.
By being allowed to keep the assets and dump the liabilities firms are unfairly profiting and abusing the FSCS. Something has to be done to stop this outrage.