The UK's Financial Conduct Authority (FCA) has placed numerous restrictions on Nexus Independent Financial Advisers and Nexus Investment Managers due to concerns about the use of £2.1m that appears to have been withdrawn from client accounts by the firms' shared director.
Please note that Nexus Independent Financial Advisers and Nexus Investment Managers are in no way associated, affiliated or have any connection with Nexus Global IFA Network or Blacktower Financial Management Group.
On 25 January, the FCA restricted Nexus Independent Financial Advisers and Nexus Investment Managers from carrying out any regulated activities and accessing their assets, in addition to being ordered to secure all books and records and preserve all information on its regulated activities, according to the FCA register.
Both firms share an executive director, Kerry Kathleen Nelson, who also holds compliance oversight and money laundering reporting roles.
On 26 January, both firms went into administration, according to the FCA register.
In its First Supervisory Notice, the FCA said it has "very serious concerns" that the firms' sole director may have deducted sums from clients without authorisation or without their knowledge.
"Specifically, it appears that the firms' director may have taken a total of £2,072,242.80 in unauthorised and/or inappropriate withdrawals from clients of the firms," according to the FCA.
The conduct appears to relate to multiple clients, the FCA said, and spanned at least between September 2021 and December 2022.
It added that there is evidence to suggest that on or around 14 January 2023, the firms' director was able to access bank accounts held by the firms and withdraw a further £50,000 which was transferred to their personal bank account.
The unauthorised withdrawals from clients were taken as "ad hoc payments" of fees, the FCA said.
Consequently, the FCA said it considers it necessary and proportionate to impose the requirements to address the ongoing risk of further dissipation and to preserve the firms' assets and provide an appropriate degree of protection for the firms' customers.
The FCA also said that it was aware that the firms' director is not performing any ongoing functions at the firms and as a result, there is an absence of individuals capable of making significant decisions and no oversight of other staff at both firms.
The restrictions should take immediate effect, "because the matters set out in this First Supervisory Notice demonstrate that the firm is unable to manage its affairs in a sound and prudent manner, and is putting consumers at risk", the regulator said.
The FCA added that both firms have the right to make written or oral representations to it on the First Supervisory Notice, as well as to make a reference to the Upper Tribunal.
The Financial Ombudsman Service (FOS) has upheld three claims against Nexus IFA, which relate to poor advice about pensions, failure to provide reviews, in addition to concerns that the administration and governance arrangements for the clients' pensions.
