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FSCS confirms Honister Capital in default

  • 17/05/2013
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Honister Capital and its IFA networks Sage Financial, Honister Partners and Burns Anderson have defaulted, the Financial Services Compensation Scheme (FSCS) announced today.

The firm, which entered administration on 3 July last year, was found to have sold unregulated collective investment schemes (UCIS) through appointed representatives, the FSCS confirmed.

The FSCS is asking the firm’s claimants to resubmit their claims, including those who had previously been rejected.

Any customers of the affected firms who believe that they were mis-sold a UCIS investment should also contact the FSCS to make a claim, the scheme said.

Honister was put into administration in July, after it failed to secure professional indemnity insurance (PII) for its member firms, aggravated by its receipt of an uninsured claim for £6m.

The firm’s appointed administrator Grant Thornton said at the time that PII costs for the firms “have increased to unsustainable levels, driven mainly by large claims relating to historic business and, to a lesser extent, wider industry issues”.

Honister’s directors were understood to have been attempting to arrange the sale of the business to a third party prior to going into administration, however the sale fell through.

Prior to that, Paradigm was believed to have been in talks to purchase the group’s assets but the deal also fell through.

Grant Thornton later approved the sale of Honister advisers’ pipeline commission to corporate advice firm MacRobins.

Scottish Life, Aviva, Standard Life, Aegon and Skandia also allowed bulk novations following what they considered to be a termination of their contracts with the defunct firm.

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