Wealth management is a deep and diverse sector in the UK, with trillions of pounds stowed away safely, whether they be pension pots, physical, financial or property wealth. Amidst this ocean of wealth, Dolfin Financial UK found itself floundering, and it ultimately collapsed into a special administration mere days ago.
FCA involvement raised doubts
Dolfin Financial UK was seemingly all systems go, when you explore its most recent financial records. According to Companies House, Dolfin’s KPIs, which included the volume of client assets were growing rapidly between 2018-19. In 2018, the assets it held numbered £1.29 million, before surging to £3.4 million in 2019. The business admitted having experienced rapid growth in 2019.
In its daily work, Dolfin provided “discretionary, advisory and execution-only services to retail and professional clients on a range of investment securities, such as shares, government and corporate bonds, and investment funds. The firm also provided Tier 1 investor visa services”, according to the Financial Conduct Authority (FCA).
In the last set of Companies House records, a report reflected this buoyant state of affairs, claiming: “As such, they have invested in growing its compliance framework, adding governance controls and encouraging a culture of strict adherence to regulation.”
Dolfin takes a plunge
However, as it turned out, achieving these goals in the light of rapid growth proved easier said than done. That’s because, in March 2021, the FCA issued a Supervisory Notice, stopping Dolfin from carrying out regulated activities altogether. The FCA revealed it had done so in light of concerns about how Dolfin conducted its affairs, especially with regard to Tier 1 Visa business activities and financial crime controls.
Rapid growth can sometimes prove to be more of a curse than a blessing, as seems to be the case with Dolfin Financial UK. Despite being aware of the need to abide by the regulatory framework expected of wealth management businesses, Dolfin may have proved unable to cope with this expansion. In December 2019, the business participated in voluntary restrictions on regulated activity.
A review followed, at the conclusion of which the FCA decided to formally restrict all regulated activities. Dolfin is now proceeding to apply to the Court for a Special Administration, as it reportedly wishes to wind down in a solvent manner. The Court appointed Adam Stephens and Kevin Ley to serve as Joint Special Administrators from Smith & Williamson LLP.