FCA shuts down WealthTek after uncovering ‘serious issues’

The UK financial regulator has shut down WealthTek, a Newcastle-based wealth manager, and made an arrest after uncovering “serious regulatory and operational issues” at the partnership.

The Financial Conduct Authority said on Thursday that it had ordered WealthTek, which also trades as Vertem Asset Management and Malloch Melville, to cease trading, having taken “urgent steps” with the High Court. Accountancy firm BDO has taken control of the company on an interim basis following a court hearing on Monday. The FCA will ask the court on Thursday to place WealthTek into special administration.

The watchdog said a 48-year old man had also been arrested by Northumbria police, working with the FCA, in connection with the investigation, who was later interviewed under caution. The FCA provided no further details.

BDO insolvency specialists Shane Crooks, Mark Shaw and Emma Sayers were appointed by the court on Monday to temporarily oversee WealthTek’s affairs, and will remain pending a court hearing on Thursday.

According to an update from BDO, the court will hear an application from the regulator to place WealthTek into special administration, in order to protect customers’ money. Firms placed into special administration can be rescued as a going concern or wound up, if in the best interests of creditors.

In a series of Q&As prepared for clients, BDO said Crooks, Shaw and Sayers would then be able to “begin the process of returning client money and assets to clients and distirbut[ing] the firm’s assets to creditors in accordance with the relevant legislation.” 

The FCA refused to comment on how many customers held money with WealthTek, or what kind of failings it had uncovered. WealthTek is FCA-authorised and provides discretionary, advisory and execution only services to retail customers.

The company is based in Newcastle, according to filings with the UK corporate register, Companies House. WealthTek’s had assets of £446,000 as at 30 September 2021, according to its accounts filed last September, down from £1.5mn in March 2020. A notice on the firm’s website confirmed the FCA action.

The FCA said it was “in close contact with the firm and the interim managers regarding the fair treatment of customers and further information will be made available by them in due course”.