The client bank of a collapsed advice firm facing a flood of complaints has been bought by an adviser in the Quilter Financial Planning network.
Fiscal Wealth Planning, an appointed representative (AR) of Quilter, bought the client database of West Midlands-based advice firm BlackStar Wealth Management which collapsed in August, an administrator’s report has shown.
The client bank acquisition means BlackStar clients will receive advice from the Quilter AR. However BlackStar's liabilities will be left behind following the deal, potentially leaving other firms to pick up the compensation bill through the Financial Services Compensation Scheme (FSCS) levy.
BlackStar collapsed in August after receiving nearly 100 Financial Ombudsman Service (FOS) complaints. This led to redress demands which the firm could not make. Many of these FOS complaints related to advice on unregulated investments in Sipps.
Now that the firm has collapsed the FSCS has been passed claims from the FOS against the firm. It is currently investigating whether it should pay out compensation as a result of successful claims.
Up until 2013, BlackStar was trading profitably. At one point it recorded revenues of £12 million. However this fell to nil overnight after an associate of the firm was subject to a criminal investigation by HM Revenue & Customs, the administrator’s report said.
It is understood that Quilter assisted with the legal aspects of the client bank purchase and following the deal, clients will be engaged on an individual basis to work out whether they could be moved into the Quilter Financial Planning proposition.
A spokesman for Quilter said: ‘Many of the clients from Blackstar have not had access to advice for two months, which we do not believe is in their best interest. Leanne Holder and her firm have an opportunity to provide advice to clients in the controlled Quilter Financial Planning environment, which has strict supervision and oversight to ensure the advice is the best possible for the clients.’