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Is it really limited liability company or “phoenixing”?

What phoenixing is?

Phoenixing is a common term used to describe the practice of closing a firm and that firm re-appearing under a new guise to avoid liabilities arising from the old firm. Each time this happens, the insolvent company’s assets, but not its debts, are transferred to a new, similar ‘phoenix’ company.

The insolvent company then ceases to trade and might enter into formal insolvency proceedings (liquidation, administration or administrative receivership) or be dissolved.

What the FCA is doing to prevent financial adviser phoenixing?

It has a broad programme of work under way to tackle the harm caused to consumers when regulated financial advice firms and individuals seek to avoid liabilities to consumers that have arisen because of the poor advice they have given. As part of thier ongoing supervision of firms and of individuals controlling firms, they actively look out for and act on, situations where a FCA regulated firm or individual is seeking to avoid their liabilities arising from awards made by the Financial Ombudsman Service or are deliberately seeking to avoid paying in the future because of their poor advice or practices.

Where the FCA finds individuals who deliberately avoided their responsibilities and not complied with previous awards made against their firms, it will question the fitness and propriety of these individuals and take necessary steps against them so that they don’t cause further harm to consumers.

What you can do to protect yourself from poor financial advice or a potential phoenixed firm?

Research the financial advice firm/financial adviser

Don’t be the next victim, you can take control of your own destiny. It is all up to you, some can assist you the get it right.

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