We just wanted to put out a brief article, ahead of our updated Timeline post, which will be published shortly, to remark on the recent release of valuation statements to Brite Advisors platform victims, the latest stage of the process to ultimately return the funds to members.
What is a Valuation Notice?
This is the stage in the Brite Advisors Receivership where the Receivers, McGrathNicol (MGN), are working to:
- Ascertain how accurate their data is for what was reportedly owned by each Brite Platform member.
- Start the process of calculating the proportion of the final recoverable amount that will be owed to each beneficiary.
The valuations are as at 13th December 2023, a date agreed with the courts in Australia, as it marks the point at which the Receivers could obtain accurate (or somewhat near it) figures for what was owned by each Brite client before the platform went down and Brite Advisors’ myriad issues finally started to catch up with them.
Key Points to Remember
- This valuation is not the amount that will be returned to Brite clients: It is used for confirming the accuracy of the data and apportioning the final retrieved assets. It is not the final amount clients will receive.
- Reasons for discrepancies:
- The figures may not be 100% accurate (MGN has already stated that Brite Advisors were providing inaccurate and manipulated data to some clients).
- There have been no subtractions for missing funds (e.g., margin loans and withdrawals).
- The valuation does not account for any growth in assets since the valuation date.
- Other factors like dividend and withholding tax accounting discrepancies can affect the final amount.
However, as we have often said to those Brite Advisors clients we are helping to make heads or tails of these valuation notices, we would not be too surprised if the actual amount returned to each Brite client is ultimately not that far from the figure they will be confirming or disputing on their screen now, considering how well the markets have performed since the date of these valuations.
Market Growth and Impact
- Positive market performance: Famous last words, but there has been significant growth over the last 12+ months (since the start of 2022), and the overall asset base has grown significantly, which should help offset the losses that will occur from the misappropriation of client assets.
- Uncertainty of markets: However, the markets can turn quickly, so this slight, even if purely psychological, respite provided by the growth could all disappear if markets fall between now and the date they redistribute the funds.
Fingers crossed they don’t turn!
What is the Process?
MGN are sending, and have already sent many, emails to Brite platform clients with a link to a Salesforce Portal login page, along with the login email and password. This portal is very similar, albeit likely more basic, to what you would have been using for the Brite Platform. Please note that you must have completed the Identity Verification process first before they can send you the link. If you haven't done that yet, we highly encourage you to do so. If you are having issues, liaise with MGN to try and resolve them promptly.
When you log in through the link in the email, you will see the account(s) you hold, along with the underlying portfolio, including the amount of units, unit price as of market close on 13th December 2023, and the value of each of those holdings. There is also a transaction summary showing any sales/purchases, charges (such as adviser fees), and underlying fund distributions, like dividends etc. You will also be able to see any changes made to the dividend accounting, if applicable to your assets. MGN confirmed that Brite and the platform were often incorrectly, or inconsistently, applying dividends to client accounts. It’s quite mind-boggling that this was even possible, given who provided/hosted the platform, but as we have learned (and I’m sure Brite Advisors clients, much to their chagrin, have as well), it’s always wise to never be surprised by Brite Advisors and the shenanigans, for want of a better word, that went on there.
If you review this and are happy with its accuracy, you can accept the valuation and mark yourself as ready to move on to the next step. You will also receive a DocuSign letter with some statements that you need to review and sign. Again, please read it thoroughly and sign once you have confirmed you are ready to proceed.
What to Do if Unhappy with the Valuation Notice?
If you are indeed someone who does not agree that what is showing on the Valuation Notice is what you should have had listed as at 13th December 2023, particularly if it is materially different, such as incorrect or reduced holdings, you need to confirm that you wish to formally dispute the Valuation Notice.
If you are not happy with the valuation shown because you believe it is incorrect (e.g. funds, units or prices being wrong), you can dispute it and provide evidence to support your case.
You have 21 days from the date of the original email to make your decision. If you decide to dispute the valuation, you must submit your evidence within that same 21-day period.
Important Notes
- Withdrawals after the cut-off date: Any withdrawals made after 13th December 2023 will not have been considered in your valuation notice but will be factored into the Distribution Process.
- Dividend accounting issues: There are some outstanding issues regarding the correct accounting of dividends, particularly with Maltese QROPS. Many withholding taxes were not correctly accounted for by the Brite Platform, and it will take a while to work through these. So there are some minor changes that will be made to the final data, once they have finished, with the help of tax advisors, determining the correct amounts to withhold etc.
MGN will then investigate your dispute and the evidence provided, and will take one of three actions:
- Accept your dispute: They will provide an updated valuation notice.
- Request more evidence: If they believe your claim may have merit, they will give you the opportunity to provide additional evidence, starting a fresh 21-day window to support your claim.
- Dismiss your claim: If they find no merit, your claim will be rejected.
Advice and Caution
Given the sample size we have, we do not see so far any evidence of material errors in the data used to provide the valuations, and would caution against getting too lost in the weeds trying to find out minute errors, especially as you may find it hard to prove any error, given that you have not had access to the portal for a year, and that any supporting documents you have may very well be not accurate themselves, which MGN have already alluded to.
If you really do think there is an error, then absolutely, go ahead and dispute it, but would suggest you join one of the social media Brite Victims groups and ask people on there for their thoughts, whilst also engaging an adviser, preferably one with technical qualifications (ACA/CFA/CFP) like those at Cameron James, to help you analyse it, which is what we have done for many Brite members thus far.
How is the Process Going?
The process seems to be going well, with many Brite members commenting that they have found it smooth and that the figures in the valuations match, or are close to, what they expected to see listed as their holdings as of 13th December 2023. While we have come across a few discrepancies, these have been very minor and, for the most part, have been in a positive direction, so they have not caused much concern. These discrepancies mainly involved cash holdings, so we suggest anyone reading this pay particular attention to that account and the transactions. If there is a systematic error, which it looks like there perhaps may be with some of these cash assets, then all but certain that MGN are already aware of it, and would likely look to do a blanket update to the data.
However, we have, of course, not spoken with everyone, so there may very well be some members who have encountered large discrepancies between what they expected to see and what is actually shown on their Valuation Notice.
Key Points to Note
As mentioned earlier in this article, there are known errors in the data, meaning many valuations will be subject to slight amendments in the future. So, if you are recalculating and finding small discrepancies between what is shown on the Valuation Notice and what you expect, please keep in mind that this may be expected, depending on the assets you own and their jurisdictions/wrappers.
What MGN are really looking for, and why they have gone to the effort of doing this, is to identify situations where the portfolio they think the client owns, based on their data, differs from what the client believes they own. This could mean holdings are missing, or the number of recorded units owned is different, with no logical, non-suspect, reason for the discrepancy.
If you believe this applies to you, gather all the evidence you have (e.g. historical valuations, contact notes, correspondence with your adviser, advice reports, etc.), and send it over to MGN as soon as possible.
Haven't Received Your Valuation Notice Yet?
If you have not yet received your Valuation Notice, MGN should have already written to inform you that they are still calculating your valuation and will send it to you once the calculations are complete.
The main situations where this may occur are if you had bespoke assets. The greater the quantity and more esoteric the investment, the longer you can expect to wait. Also, those with issues tracking transactions or with Minerva loan notes (a form of Structured Note that was sold by Brite) should also expect to wait longer for their notices.
Hopefully, this should not take too long. It is clear that MGN are being much more pragmatic about moving things along in the process than they have been, in our view, with previous steps, without getting bogged down in issues that, while very important and needing to be resolved accurately and fairly, may not impact large portions of the membership.
What’s Next?
The next stage in the process is the Explanatory Memorandum, which will outline the Receivers' proposed option/s for returning the funds to Brite platform clients. This is scheduled to be provided to the courts on 4th December, with a court hearing pencilled in for 13th December.
The outcome of that will be communications to trustees and beneficiaries, along with a proposed consultation period, allowing affected parties time to digest the memorandum and provide any feedback or pushback, if applicable.
If you are happy (relatively speaking, given the whole Brite Advisors debacle!) with your valuation, and you have accepted it and signed the DocuSign, there will be nothing for you to do directly regarding the Receivership until the court hearing and the publication of the Explanatory Memorandum. Given that the memorandum was originally estimated by MGN to be published on 23rd October, we are likely 5-6 weeks behind the original schedule published on 9th August. Therefore, our best guess for when MGN might be in a position to release the assets is June 2025, though that will fluctuate, especially if their proposed method of distribution meets significant pushback.
More from Cameron James
We will be publishing a Timeline Blog shortly, updated for the various changes that have occurred since MGN originally published their provisional timeline, such as adjustments to court hearing dates and the slight delay in the Valuation notices and confirmation process.
While the process has been dragging on, it does appear that things are progressing, and an expected finish line of around June is not an unreasonable estimate. Many Brite clients have delayed making a decision about whom to appoint as a new financial adviser, if applicable, but it is starting to become increasingly important to prioritise choosing an adviser and building a strong, transparent and trusting relationship.
Some of our advisers will also begin providing financial planning advice to Brite platform clients who have appointed us as their financial adviser, despite potentially not generating any fees. Given the prolonged timeline, many Brite clients have never truly experienced “real” financial planning and advice.
With the significant changes introduced by the new UK Budget to financial advice and planning, we believe this is the right approach. This is also where all our advisers, being FCA-authorised and working with UK residents, offer a significant advantage, as we are deeply engaged in advising UK residents on these future changes and helping mitigate financial planning issues that did not exist just four weeks ago.
There hasn't been much public attention, but this budget has major implications for expats, so it’s worth reaching out to an adviser just to discuss the changes, let alone seek advice on Brite platform assets.
Anyone with a UK Pension or a QROPS funded with a UK pension really needs to consult a knowledgeable and informed adviser, as many of the assumptions previously held (e.g. not needing to pay UK tax) may no longer apply, or you could be caught in certain tax areas, even if only temporarily.
In addition to the Brite Advisors Timeline blog mentioned earlier, we will also soon publish a blog on Maltese QROPS for US Residents, based on insights from our YouTube Video and our QROPS vs SIPP for US Residents blog. We have other exciting blogs and YouTube videos planned as well (well, exciting to us, at least!), so keep your eyes peeled there.
If you haven’t already, please feel free to book in to speak with one of our advisers here, where we will be able to go through the Cameron James advice process with you, and answer any questions you may have.