GlobalCapital to exit financial advisory business

The financial services provider GlobalCapital is exiting the investment and advisory sectors, to concentrate solely on its core insurance business.

GlobalCapital operates principally in insurance, investment and property services, however in its interim statement issued this week, the company said that in line with the group’s strategy to focus exclusively on its core insurance business, “Global Capital PLC will, subject to regulatory approval, be exiting its investment and advisory business.”

The group said this change in direction would strengthen its turnaround within the established timeframe.

The company registered a loss before taxation of €966,897 for the first six months of 2014, compared to a profit of €65,541 for the same period in 2013.

Stockbroker Paul Bonello, who assisted former clients of Bank of Valletta’s La Valette multi-manager property fund in recouping millions of euros lost in investments, said the financial regulator should not allow any winding-up before GlobalCapital honours directives to compensate clients.

Bonello, of Finco Treasury Management, has represented clients

“Naturally everyone is entitled to cease a business.  GlobalCapital no less.  However, investment services to the retail general public is a regulated activity, and it should not be acceptable that the moment one becomes inundated with client complaints and starts being sued there is a resort to the quick solution of selling out or liquidation,” Bonello, of Finco Treasury Management, said.

Bonello has represented clients who claim they were mis-sold complex financial instruments by GlobalCapital.

“We have already had the case of All Invest where the company attempted to short-circuit complainants with a petition for bankruptcy.  In my opinion, MFSA as regulator ought not to consent to GlobalCapital winding up or selling its investment business without having first honoured rulings already issued by MFSA in favour of complainants for compensation for misselling and which to date have remained defiantly ignored.

“Likewise, GlobalCapital ought first to deal orderly with the outstanding numerous complaints against it as well as the various litigation in progress.  Only then can GlobalCapital morally merit the right to exit investment services.”

GlobalCapital said that from early June 2014, an aggressive transformation plan has been targeting stable growth and sustainable profitability.

Malta’s financial services industry has been rocked by consumer complaints, particularly in cases where retail clients were sold complex financial instruments.

Last week, an Attard couple filed a judicial protest against All Invest and owner Wallace Falzon, as well as his relatives, accusing him of transferring the company’s assets to a family trust in a bid to avoid financial claims over investment breaches.