Eight Members of Parliament have written to Chancellor Rachel Reeves, urging her to investigate the Financial Conduct Authority’s (FCA) handling of a whistleblower complaint related to the now-collapsed discretionary fund manager (DFM) WealthTek, two years prior to its downfall.
WealthTek collapsed in 2023, leaving an £81 million shortfall in client funds. A criminal investigation into the firm is currently underway.
The letter, signed by prominent figures including former Brexit Secretary David Davis, raises the possibility of compensation for investors who have suffered financial losses.
“Our financial system depends on having an effective and vigilant regulator,” the MPs stated in the letter. “It is crucial that these allegations are thoroughly investigated—much like the inquiry into the FCA’s involvement in the London & Capital Finance [LCF] scandal—and if there has been any failure, a compensation scheme should be established, and measures taken to prevent such incidents in the future.”
The collapse of the mini-bond investment firm LCF led the government to establish a £120 million compensation scheme in 2021, following a report by Elizabeth Gloster, which highlighted consistent failures in the FCA’s regulation of the firm.
One notable difference between the two cases is that while some LCF investors were not covered by the Financial Services Compensation Scheme (FSCS), WealthTek clients should all fall under the FSCS’s protection. A recent court hearing revealed that the FSCS expects to pay out £40 million due to WealthTek’s collapse. However, clients who invested more than £62,000 may face losses due to the FSCS’s payout limit per individual and the costs associated with the special administration process.
Last year, Gary Stockdale, who worked as an investment research analyst at WealthTek from 2011 to May 2021, revealed to Citywire’s New Model Adviser that he had raised concerns about the DFM with the FCA two years before its collapse. Stockdale has since self-published a book detailing his experience, in which he claims that although the FCA assigned him a case handler, the regulator continued to allow WealthTek to operate.
The FCA has declined to comment on the matter, citing the ongoing criminal investigation.
MP Kevin Hollinrake, who signed the letter along with Davis, Andrew Mitchell, Graham Stuart, Tom Tugendhat, Luke Evans, Peter Fortune, and Charlie Dewhirst, expressed concern for constituents who lost money in the collapse.
“This is a matter of serious concern, particularly for some of my constituents who have been directly affected and deserve clear answers and accountability,” Hollinrake stated on his website.