Wealth manager Dolfin has been barred from carrying out regulated activity by the Financial Conduct Authority (FCA), due to concerns about its financial crime controls.
The firm, which has client assets of about £3 billion, recently announced it was moving to new City of London headquarters following a 10-month transformation programme implemented by its new management.
Dolfin said in a statement that the move by the FCA was “disappointing” and it had not been given prior notice.
The FCA imposed the restrictions on Friday (12 March), citing “serious concerns” around the way that Dolfin operates its business, including its Tier 1 investor visa business activities and financial crime controls.
The regulator said it had been working with Dolfin while it took steps to try and address these concerns, including imposing voluntary restrictions on regulated activities on 24 December 2019, and undertaking a ‘skilled persons review’ – a type of independent review the FCA can commission of a regulated firm.
Dolfin recently signed a lease on a new building on Coleman Street in the City of London
The FCA said following this review “and developments that have taken place since”, it was imposing restrictions “in the interests of protecting the integrity of the UK financial system”.
Dolfin’s statement in response said: “We are urgently considering the FCA's disappointing action and approach in imposing these restrictions without prior notice to us.
“Given our ongoing dialogue with our regulator, we are taking advice on our response.”
Clients would not be able to trade, withdraw, transfer, or otherwise use assets held with Dolfin while the restrictions were in place, without the consent of the FCA.
The regulator said it was uncertain how long the restrictions would remain in force, “as this is subject to the FCA’s concerns being addressed by the firm”.
The firm first ran into trouble with its investor visa scheme in late 2019, when it entered into a voluntary agreement with the FCA.
This agreement meant it could only offer its Tier 1 UK Investor Visa service to new clients on the basis of a discretionary investment management service.
The regulator had been unhappy with a potential conflict of interest at the firm, in which bonds issued by companies in which Dolfin’s directors had an interest, were sold on to clients under the investor visa scheme.
Earlier in 2019, Dolfin had bought Falcon Private Bank, the UK arm of a Swiss bank which became so embroiled in the 1MDB corruption scandal, it was forced to shut down.
Rodney Baker-Bates, part of the team which has been working to transform Dolfin
However, in April 2020, the firm came under new management as its former chief executive, Denis Nagy, stepped aside.
Rodney Baker-Bates, who joined the board as an adviser in March 2019, has recently stepped up as executive chairman to fulfil the firm’s CEO function. Mr Baker-Bates has more than 50 years’ experience in UK financial services, including as chief executive of Prudential. Today, his other main role is chairing insurance broker Willis.
The remainder of Dolfin’s executive committee comprises Robin Davies who joined in May 2020 and has held senior operations and change posts at the likes of Citi, Deutsche Bank, and Lloyds; former Goldman Sachs director Rob Watts; Simon Black, Dolfin’s CIO since 2018; and Nick Emery, its head of compliance.
Mr Baker-Bates said in a February statement to thewealthnet that the firm had, since May 2020, been implementing a “thorough and robust” transformation programme to “refine and strengthen” its core offering.
“2020 proved a challenging year for us all but enormous progress has been made and we are now firmly looking at the next stages of growth for 2021 and beyond,” Mr Baker-Bates said at the time.
Dolfin was founded in 2013 and its main backer is wealthy businessman Roman Joukovski, who is no longer involved in the day-to-day running of the business.
