Greyfriars Asset Management has officially reached an agreement with the Financial Conduct Authority (FCA) to stop accepting client money or custody assets from new or existing clients. A list of extensive permissions was attached to Greyfriars’ FCA register, preventing the firm from conducting much of its conventional business. Although there has been no suggestion that the latest restrictions are related to alternative investments held under the DFM, Greyfriars’ ongoing troubles have been repeatedly linked to the underlying investments of its Portfolio 6.
Are Alternative Investments to Blame for Greyfriars’ Troubles?
Greyfriars is a beleaguered self-invested personal pension (SIPP) provider that also handled discretionary funds for internal and independent financial advisors (IFAs) until November 2016, when the FCA stripped the firm of its permission to accept new investments into its discretionary portfolio. A note on the FCA register read that Greyfriars was required to:
“Cease carrying on managing investments regulated activity in respect of new money; this includes cease accepting any new money into the Greyfriars Asset Management Portfolio Six on a permanent basis.”
There has been no official explanation as to why the firm lost its discretionary fund management (DFM) permissions. However, an independent investigation into Greyfriars’ Portfolio 6 found several examples of alternative investments within the scheme, including US real estate, car park assets, and luxury resort developments overseas.
In May 2017, Greyfriars was issued a section 166 by the FCA, which entails an independent professional analysing aspects of the firm’s business that are of particular concern to the regulator. Neither Greyfriars nor the FCA elaborated on which areas of business were subject to review. There is no confirmation that this review was related to alternative investments held under Portfolio 6.
The latest restrictions posted by the FCA restrict Greyfriars from carrying on any regulated activities in respect of new and existing clients, unless not doing so would put the firm in breach of contractual obligations. Once again, the FCA and Greyfriars have refused to comment on whether this latest restriction has been put in place due to the alternative investments underlying the Portfolio 6 offering.
Money and Me Claims: Analysing Alternative Investments
It has long been the position of the FCA that alternative investments are unsuitable for retail investors. They can be incredibly lucrative, but the risk represented by the lack of protection from the Financial Ombudsman Service (FOS) outweighs the slim potential of financial success. At Money and Me Claims, we have put together a short primer about alternative investments and outlined some of the most common unregulated investment products sold to pension holders.
If you believe you have been mis-sold an alternative investment product through an IFA or pension provider, you may be entitled to compensation. Please do not hesitate to contact us to find out more.