How investors can mitigate the impact of insolvencies during the 'winter of discontent'

Keep an eye on red flags

With many businesses headed towards a ‘winter of discontent,’ dealing with a combination of the after-effects of Covid-related disruption, supply chain issues, soaring inflation and labour shortages, we are undoubtedly going to see a continued rise in insolvencies over the coming months which will emerge in many different and often unpredictable forms.

First, we may see regulatory action leading to the closing down of financial services providers. We saw this in July when Dolfin, an FCA-regulated wealth management firm, entered into special administration several months after the FCA imposed restrictions on the company, preventing it from carrying on its usual course of business. This resulted in Dolfin being put into an insolvency process whereby £100s of millions of third-party investment assets have been effectively trapped and will need to be dealt with by the administrators. We have also seen an increase in payment service prov...