On 22 December 2025, the FCA published a First Supervisory Notice (the Notice) imposing a number of immediate, wide ranging restrictions on Advantage Wealth Management Ltd (the Firm). The restrictions effectively prevent it from carrying out any further business by, amongst other things, restricting it from carrying out any regulated activities without consent from the FCA. The restrictions were imposed following the divorce of the two directors of the Firm, during which Director A (the husband) was found to have deliberately diminished the value of the business in a failed attempt to defeat Director B's (the wife's) claim for financial provision.
Background and investigation
The Firm operates as an independent financial adviser and was authorised by the FCA in 2015 to carry out various regulated activities. The Firm has two directors, the husband and the wife (holding 50% of shares each), who have recently concluded divorce proceedings against one another in Scotland.
It is clear from the Notice that the Firm was entangled in the divorce proceedings. For example, the husband took steps to remove the wife's access to the Firm's systems and records, including a shared Google Drive and her work email account. The divorce proceedings also prompted attempts to change the ownership and operation of the Firm. In particular, the husband informed the FCA in August 2024 that the Firm's ownership would change in due course because of the divorce proceedings, and seven months later, the wife notified the FCA of an interim interdict prohibiting the transfer of the Firm's clients to another company in respect of which the husband had applied to the FCA for authorisation. Further, in the course of the divorce proceedings, the husband claimed to be unable to work and informed the FCA that he was stopping ongoing advice services to the Firm's clients because of that inability to work. However, he was simultaneously applying for authorisation to carry out precisely the same work in the new company.
Over the course of its investigation, the FCA requested documents and information from the wife, which she provided while informing the FCA that, although she had lost access to some of the Firm's systems, to the best of her knowledge, her husband was continuing to provide services to clients.
In September 2025, the Scottish Court handed down the divorce judgment, which held that the husband should pay the wife the sum of £215,726 (this sum having been arrived at by the court making an adjustment to reflect the diminution in value caused by the husband), and that the wife should transfer her shares in the Firm to the husband. The divorce judgment explicitly rejected the husband's suggestion that he and the wife work through a members' voluntary liquidation.
The divorce judgment made a number of adverse findings about the husband, including that he withdrew sums exceeding £100,000 from the Firm to himself or for his benefit. The judgment states that the husband "seemed more concerned with painting [the wife] in as bad a light as possible, wasting no opportunity to denigrate her both in his affidavit and in his oral evidence (as well as having done so in his note to the FCA)…" The judgment concluded that a number of clients of the Firm had their investments moved into cash holdings and referenced the husband's application to the FCA for authorisation to carry out the same work as the Firm, through a new entity entirely owned by him (in keeping with the wife's position that the husband had told her he would set up a new company and novate the Firm's clients to it).
The FCA subsequently established that up to 80% of clients switched all their investments into cash prior to the divorce hearing. The FCA was also informed that the husband had issued a blanket instruction to platform providers for clients' investments to be moved into cash, which suggested that the instructions had not been individually agreed with clients. Indeed, one platform confirmed that the total value moved into cash was approximately £24 million, and another reported approximately £6 million out of £7.8 million of funds held on the platform had been moved into cash.
In the period after the divorce judgment was handed down, the FCA sought further information from the husband (including by way of an information requirement), but he did not respond or answer telephone calls. Further, in October 2025, the wife informed the FCA that the full balance of the Firm's account had been transferred to the husband's new company and that the husband had not renewed the Firm's professional indemnity insurance in July 2025.
The FCA's concerns and conclusions
The FCA had a number of concerns about the husband's actions:
- The Notice sets out serious concerns about the exchange of client investments into cash holdings, which may have resulted in losses being suffered by clients. The Notice also notes that clients were likely to have different risk profiles, so it was unlikely that it was in all of their best interests to move investments into cash.
- The Notice states that the husband's actions may have been motivated by a desire to reduce the Firm's income, so that it had a lower value when considered in the divorce proceedings.
- The FCA was concerned that the Firm did not have sufficient financial resources to meet its minimum regulatory capital requirements, which included a failure to have valid professional indemnity insurance in place.
- The FCA noted that the husband had not been open and cooperative with the FCA.
- The FCA had concerns that the wife's access to systems required to carry out her role had been disabled.
In summarising its concerns, the FCA stated that it was concerned that the Firm's affairs were "not being conducted in a sound and prudent manner".
The FCA therefore concluded it was necessary to exercise its power under Section 55L(3)(a) of the Financial Services and Markets Act 2000 (FSMA) to issue an own initiative requirement (OIREQ). The OIREQ imposed the following restrictions with immediate effect and until varied or cancelled by the FCA:
- Restriction on regulated activities - the Firm must not, without the prior written consent of the FCA, carry out any regulated activities for which it has Part 4A permission.
- Assets requirement – a limitation on any action, without the consent of the FCA, that may reduce or dispose of assets.
- Records retention – preservation of all records, the form and location of which had to be notified to the FCA.
- Notification requirements - publishing in a prominent place on every website in its name a notice of the Requirements and notifying all current customers of the Requirements.
Comment
This case presents a stark illustration of how personal conflicts between firm controllers can spiral into serious regulatory failures. The divorce proceedings between the husband and wife appear to have been the catalyst for a cascade of concerning decisions which fundamentally undermined the Firm's regulatory compliance. As the divorce judgment states, "separation and divorce is a stressful business" and this is only heightened when the parties are also in business together. The destruction caused in cases such as this can often be lessened by better forward planning (by way of a bespoke Shareholders Agreement and/or Prenuptial Agreement) and adoption of early Non-Court Dispute Resolution methods post-separation (such as mediation or arbitration).
The case also highlights the importance of professional indemnity insurance cover as well as the importance of engaging with the regulator, even when a firm is facing difficulties or internal disputes.
The FCA's decision to impose immediate restrictions and to publish the Notice, the effect of which is to stop the Firm from carrying out all business, serves as a clear warning and reminder to the industry that: (i) personal conflicts between controllers must be managed in a way that does not compromise regulatory compliance or consumer protection; and (ii) where appropriate, the FCA will exercise its robust, supervisory powers which can effectively bring the operations of firms to a standstill.