Toxic Non-Standard Asset Screening
Any asset that cannot be readily realised within 30 days, or be accurately and fairly valued on an ongoing basis, will fail to meet the FCA definition of a Standard Asset. These can be highly detrimental to both consumers and the regulated firms connected to them.
OVERVIEW
Consumer detriment
No reputable regulated firm would ever knowingly take any action that could put their clients in a detrimental position or leave them open to unnecessary risk, yet this still happens all too often.
Non-standard, or toxic, asset have been a significant cause of client loss for many years now and the purveyors of these continuously find ever more ingenious ways of masking their true nature, reshaping their design to fit into seemingly innocuous structures, adapting to changes in FCA definitions and camouflaging their presence in otherwise respectable products and portfolios.
We can assist you in identifying these and avoiding consumer harm or detriment.
HISTORY
Evolution
The first generation of structured toxic assets involved special purpose vehicles, such as unlisted corporate bonds, that were often marketed as providing high and guaranteed return from property development.
When the FCA changed the definition of 'non-standard' asset to remove unlisted bonds the manufacturers simply moved to the third generation model, using recognised, but easy to access, stock exchanges for bond listing, thereby rendering them standard once again.
The next approach involved using the services of discretionary fund managers to create portfolios that then invested in these bonds, thereby further obscuring the picture. We consider it unlikely that the evolution stopped here.
IMPACT
Consequences for firms
Any regulated firm that is involved in such assets, unwittingly or not, faces dire potential consequences.
Our Chief Investment Officer, Julian Penniston-Hill, had hands on experience of this as the founder and CEO of Intelligent Money, a highly reputable SIPP provider that went to great lengths to avoid any exposure to such assets.
Despite strictly prohibiting their inclusion and only allowing investment with regulated providers the company still became exposed, the consequences of which led to the 22 year old firm with a previously unblemished history placing itself into voluntary administration.
ASSISTANCE
Protecting you and your clients
Having been through an immensely detailed legal and regulatory processes, with each element dissected and advised upon by specialist lawyers, Julian can brings a unique perspective and in-depth level of knowledge and experience to this subject.
Vanquish Analytics therefore provides real world insight and understanding as to what needs to be identified and addressed within an existing book of business, together with the measures needed to be taken to avoid future contamination, so that firms can ensure they are best positioned to protect both consumers and themselves.
