Wealth consolidator Tavistock has set aside £2.5 million to cover provisions relating to one of its former adviser who is serving a prison sentence.
The news was buried in the firm's full-year numbers, in which it said it was paying its first dividend after a doubling in profit.
The adviser in question, Neil Bartlett, was jailed after defrauding family and friends out of £4.5 million.
He was arrested at Manchester Airport last November and was sentenced to eight years in prison for 14 counts of fraud at Liverpool Crown Court in December 2018.
Bartlett told his victims he was investing their savings, but in reality he was using the money to fund a 'playboy' lifestyle that included ‘high-class’ Russian prostitutes, stock market gambling and expensive holidays, according to a BBC report.
Bartlett was at Tavistock from 2012 to May 2018, according to the Financial Conduct Authority register. The advice group has now said it has set aside £2.5 million to cover liabilities arising from the former adviser.
‘As a consequence of his [Bartlett] actions, the subsidiary company within the group with which he was previously associated has been approached by a number of victims, the majority of whom were previously unknown to the company, seeking to recover monies stolen from them by Bartlett,’ Tavistock’s financial statements said.
‘All steps are being taken by the group to refute these approaches and to address them individually in an appropriate manner. Having sought legal advice, the directors consider it appropriate to make a provision of £2.5 million regarding this matter.’
Speaking with sister publication New Model Adviser®, Tavistock’s chief executive Brian Raven said the situation is ‘extremely disappointing’ and a ‘dreadful shame for the people who have been defrauded’.
‘Those who were our clients who have been given bad advice, where we believe the responsibility is ours, will be recompensed. But those who have simply been defrauded unfortunately will need to seek recompense elsewhere,’ Raven said.
He added following the incident Tavistock paid for a third-party to review the advice firm’s systems and controls ‘to make sure we didn’t need to improve any area’.
‘The sad truth of the matter is if someone is criminally minded and is allowed to open a bank account and able to process substantial amounts through that bank account without any controls from the provider of the account, then we were unaware of it,’ Raven added.