Speed bumps on the road to ABS

Speed up authorisation or risk scuppering finance deals, SRA told


Tim Oliver
Tim Oliver

Pressure is mounting on the SRA to speed up the authorisation of alternative business structures (ABS) after concern that private equity deals could collapse as a result of regulatory delays.

Insurance firm Parabis agreed a £50m funding deal with private equity house Duke Street in January, with the intention of going live at the end of February. The firm has had to negotiate a month-long delay because of issues with gaining SRA approval.

It is understood that Silverbeck Rymer, which agreed a deal with AIM-listed Quindell Portfolio in January, is also facing regulatory hurdles that are causing delays.
“It’s been immensely frustrating,” said Parabis chief executive Tim Oliver, the driving force behind the deal. “We understand the right firms need to be authorised but [Duke Street] are already FSA-regulated. We struggle to understand why they’ve made such a meal of it.”

According to another source, SRA regulator the Legal Services Board (LSB) has stepped up its interest in the applications.

“Issues have been raised with the LSB,” the source said. “They’re more closely involved and are now in regular dialogue with the SRA.

At the end of the day, the LSB has a partial responsibility and needs to get more involved.”

The SRA is believed to have been taken by surprise by the level of applications – last month it revealed the number to be in excess of 120 – despite a three-month delay to the start of the application process, which was meant to begin in October.

The race to be first is seen as key, with firms keen to raise their profile in consumer markets. Russell Jones & Walker, which is awaiting approval for its deal with Australian Stock Exchange-listed Slater & Gordon, expects its tie-up to be completed by 30 March.

An insider said: “The deal with Parabis and Silverbeck Rymer is a step into the unknown for the SRA. Slater & Gordon has five years’ experience working in this environment and the SRA seems quite comfortable with that. At this stage we’re 95 per cent sure that it’ll go live on 30 March.”