Shares in UK financial services distribution group Berkeley Berry Birch have been temporarily suspended at its own request pending clarifica...

Shares in UK financial services distribution group Berkeley Berry Birch have been temporarily suspended at its own request pending clarification of its financial position. The group has recently been battling on many fronts. In July of this year, the UK’s financial regulator, the Financial Services Authority, cancelled the permissions of three of BBB's regulated businesses because of regulatory capital shortfalls. At 30 September 2005, the company’s three regulated businesses had a combined capital resource shortfall of £10.9 million ($18.87 million), based on their un-audited FSA returns. BBB has appealed against the FSA’s decision and, according to the company, is trying to increase regulatory capital by planned disposals and an equity fundraising. The FSA, though, is not satisfied that BBB’s proposals are adequate. This was the straw that broke the camel’s back and the company asked for its shares to be suspended. The regulated businesses, including independent financial advisor network BIA and Berry Birch & Noble Financial Planning, do not hold client money and, again, according to company, the enforcement process has not risked client assets. In its last audited accounts BBB showed an operating loss of £1.6 million on turnover of £67.3 million. To compound BBB’s problems, the FSA has been investigating the selling of some regular savings plans and life plans by network members of BIA between December 2001 and September 2004. The investigation has identified management and procedural shortcomings in BIA and has resulted in a public censure. The individuals concerned are no longer with the company. The regulator wanted to fine BIA £425,000 but decided not to when considering its limited financial resources and the FSA’s desire to ensure that customers are compensated. BIA is now doing a limited “past business review” to be overseen and reported on by PwC. If any unsuitable advice has been given, causing a loss to be incurred, appropriate redress will be paid. BIA has estimated that the total consumer loss could be between £500,000 and £1,000,000.