Bath-based financial services platform Novia has set aside millions of pounds to cover potential compensation claims over ‘legacy investments’.
The provisions have been revealed after Novia found potential liabilities in some investments held on its platform.
Novia was launched in Bath in 2008 and became one of the UK’s leading wealth management platforms capable of competing against the giants of the financial services industry.
The business acquired a high profile in its sector due to its rapid growth and also locally through sponsorship deals with Bath Rugby, with its branding used on the first team’s shirts between 2011 and 2014 and on its training kit along with naming rights on the Novia Stand (South Stand) at The Rec and matchday hospitality.
It also struck a deal to sponsor the laptops used by the club’s coaches and analysts.
Novia said in its 2022 financial statements that it had made the provision after a “detailed evaluation of legacy investments during 2023, prompted by the evolving regulatory interpretation of historic guidance”.
The financial statements also included a £156,000 one-off cost over ‘various legal matters’.
A Novia spokesperson told the Citywire business news service that the provisions related to investments held by a small number of clients bought prior to 2017 and it had professional indemnity insurance in place.
City watchdog the Financial Conduct Authority (FCA) warned the CEOs of platforms last month that they could be liable for compensation in the event platforms accept high-risk, non-standard assets that resulted in client losses.
The FCA added that it expected platforms to carry out checks during their due diligence over these non-standard investments and model out possible liability scenarios.
Legal experts at law firm Clarke Willmott said the potential compensation claims related specifically to investments likely held within Self Invested Personal Pensions (SIPPS) which Novia provided to financial advisors and their clients.
The firm’s lawyers are advising clients of Novia with investments in a SIPP to seek legal guidance immediately as there are strict time limits within which compensation for any investment losses can be claimed.
They added that the investments identified by Novia may be ‘non-standard, high-risk investments, potentially unsuitable for the individuals advised to invest.
Laura Robinson, a partner in the financial services litigation team at Clarke Willmott, said: “Whilst the suitability of the investments is a responsibility that lies with the financial adviser, SIPP operators do have obligations to act with due skill, care and diligence and, also, to pay due regard to the interests of their customers, whom they must treat fairly.
“Since July, SIPP operators have also had to comply with the new Consumer Duty, which requires them to act to deliver good outcomes for retail customers and avoid causing foreseeable harm to them.”
Novia was acquired by private equity firm AnaCap Financial, which operates out of offices in London, Luxembourg, New Delhi, Madrid and Lisbon, just under two years ago.
At the time of its acquisition by AnaCap it employed more than 120 people. However, a number of Novia staffers are understood to have left the business since and last month AnaCap was reported to have announced up to 50 redundancies at Novia, which it plans to rebrand to Wealthtime – the name of another fintech firm owned by AnaCap – in the coming weeks.
