Based on the Receivers putting forward their final Proposed Distribution orders to the court, and the minimal changes from their original memo on it published back in December, we have decided now is the time to put out a proper update blog, which we've included below. We also have a video that will be published shortly on our YouTube Channel, which is the sister to this blog, so make sure you are subscribed to see that.
We have broken it down into the key facets of the Distribution process, provided a summary of the latest updates and likely finalised approach, and then, where appropriate, added some of our thoughts and analysis.
As always, please do not hesitate to get in touch with Cameron James and speak to one of our advisers, and we have included commentary on our view on how to approach obtaining advice at the end of this update blog.
Distribution Method
After much speculation, and many months of anticipation after the receivers' original December Distribution Methodology, McGrathNicol (MGN) have finally decided on their way in which they are going to distribute funds back to the Brite beneficiaries. The overwhelming point to take home at this stage in our interpretation, and from discussions with Brite beneficiaries, is that their original December published strategy has not much changed, outside a few minor tweaks for esoteric investments/situations.
Essentially, the plan is to sell the entire portfolio, and then redistribute the cash directly to the existing Pension Trustee (or directly to the beneficiary for those directly invested on the platform i.e. not invested within a pension wrapper), basing the allocation to each Brite member on their proportional ownership as at 13th December 2023, the date of the Valuation notices which were sent out to all Brite members, and taking into account any impact from each individual's personal withdrawals and taxation implications.
There are a few assets that will be excluded from this general pool of assets, but the vast majority of the assets are in the model portfolios and bespoke assets, so unless you are one of the few Brite members with those excluded assets, but perhaps not a good use of your time to get too caught up in the back and forth between MGN and Trustees on how to treat them, as it is rather immaterial for you, although we have provided a brief summary below regardless.
Deficient Mixed Fund
You have likely read a lot about this big pot that the Receivers’ have decided to place the vast majority of Brite platform assets into, ostensibly named the “Deficient Mixed Fund.” Essentially, this is one giant pool of money, where all the model portfolios, bespoke assets, and various other types of assets, including structured products, have all been placed, except for a few carved out assets for which there is a verifiable direct ownership link.
Whilst it all but certainly at the outset was the Receiver's intention, given their original stated goals, to try and return specific assets, whether a model portfolio or bespoke assets, to each beneficiary, it became clear to MGN that this was not easily done, and that the actual ownership of specific assets would be hard to link. Especially as it was potentially likely many Brite clients had claims to the same assets given some assets appear to have been sold without the knowledge of beneficiaries, and endeavours to explore further would almost certainly add substantial costs while likely deriving minimal additional benefit, according to the latest from MGN.
Any funds in the future that are recovered in relation to the assets that should have been held by those with a stake in the Deficient Mixed Fund will also make up part of this pool, i.e. any successful compensation derived from legal/regulatory action taken.
One other important thing to note is that, again, as MGN have emphasised almost from the outset, it doesn’t matter where you resided, which Brite Advisors Jurisdiction entity your advice was provided under and whatever you many have thought about your assets being segregated from others, MGN is firmly of the opinion that the assets are all commingled and can’t/won’t be segregated.
Excluded Assets
Assets that have been excluded from this Deficient Mixed Fund include the cash account that holds the funds used to repay the margin loans, late cash subscriptions, and the Retained Funds.
For the IB Loans account, that is kept segregated.
There are also some funds that were deposited after 16th October 2023, but then never actually invested into any assets. As such, these funds will be directly returned to those members, as they were never used to finance what went on with the Brite platform, so should not be subject to any share of the main losses i.e. funding the loan notes. However, they are still part of the Receivership, and there have been costs derived from all the work involved by the Receivers, so MGN will calculate a fee for those services before sending the net amount back to them.
Any Retained Funds, discussed further below, will also be classed as Excluded Assets.
There were also some assets held on another platform named “Moventum.” Again, an immaterial amount, and not on the Brite platform, so not directly connected to everything that went on there, but, again, they have incurred expenses, and like those with cash holdings above, there will be a fee to pay before those assets are released back to them. Those who also have a share of the Deficient Mixed Fund will also be allowed to reduce their share of that to offset the fee due for the Moventum platform assets.
Minerva Notes & Other Structured Products
There are two sets of assets that have been referred to throughout the Receivership which are not part of the more standard assets that were owned by Brite (Model Portfolio/Bespoke assets etc) and they are the Minerva Notes and Structured Products.
According to the MGN report, the Minerva notes are owned by only 37 beneficiaries, and total c.£0.5m, so are immaterial given the total size of the Brite Assets
MGN have decided that the best course of action is to value these “at cost” which basically means the value is the same as what was paid for them. That value is then used to work out a proportional claim over the Deficient Mixed Fund. There has been some feedback from STM Malta in regard to these, and MGN released a further update, and will be producing a small report confirming their rationale, as they believe STM Malta brought up some valid points. Again, immaterial to the main funds, and should have little impact on the timeline for the funds being returned.
There are also Structured Notes that were supposedly owned by Brite on behalf of their Platform members, but it appears that they weren’t or at least aren’t traceable. As such, those with an ownership of these other notes also will have a proportional stake in the Deficient Mixed Fund, based on the value of those notes as at 13th December 2023.
Retained Funds
MGN have indicated that they have taken legal advice around the strength and feasibility of making claims, and around whom those claims should be made against. However, they do not have any definitive answers yet, but they do know that it is an option.
As such, MGN are asking the courts to retain a certain amount of the Brite platform assets in order to: facilitate investigating and pursuing claims against third parties, funds to pay any outstanding tax liabilities that are currently unresolved (discussed further below), fund the management of the funds for the anticipated length of the Receivership, and for any potential liabilities that may transpire between now and the funds being distributed.
The total amount of the fund will need to be approved by the court, and the expectation is that it will only be able to be retained for up to four months and require court approval to extend further. If it looks like legal action is not going to go anywhere, and if all other liabilities have been paid off, then the Courts would likely not approve any sort of continuation, nor would MGN likely request any either.
Risk Profiles
One of the things brought up by quite a few Brite members, and something we have posited as well, is around the actual model portfolios each member owns, or should own, and if those with a higher level of “risk” which, up until the point of this report at least, had performed better than lower “risk” portfolios since 13th December 2023, would then receive a higher share of the total asset growth, rather than everyone get the same return regardless of how “risky” their portfolio is.
MGN have come out to argue that that is not feasible, as model portfolios were not necessarily actually owned and directly traceable to each client, and the cost of trying to allocate all assets would be more than the benefit it would provide, if any. As such, they have confirmed that regardless of what model portfolio you owned, or what “bespoke” assets, be that individual shares or other funds, it does not matter, and everything will just be pooled together. There are a few carve outs for specific directly traceable assets, which were discussed briefly above.
Whilst again, for those of you with a higher equity level portfolio it might feel a bit unfair, as risk should be rewarded, as MGN have stated, the fact is that what was on your valuation statements from Brite, and what was actually held won’t necessarily match.
What we would advise though, like all of our clients, is to switch off financial news, don’t look at your old valuation holdings (as how they perform is not directly relevant to you), and if you do want to keep an eye on your portfolio growth, then read the weekly updates from the fund manager at Brite, where they provide information on the total return and a bit of commentary.
Calculation
The Receivers have put together a nice, simple formula to show you how each beneficiaries’ final entitlement will be calculated. This is very important, as it answers the question of “how much money am I going to get back,” at least from a calculation point of view. The actual amount won’t be known until the “fat lady has stopped singing” and all the funds are finally sold, and then the calculation can be formally run on finalised figures.
The calculation is as follows:
Beneficiary’s Deficient Mixed Fund Distribution = ((Beneficiary Entitlement – Surrender Rebate) / Total Entitlements) x Final Total Value – (Withdrawals + Tax)
Essentially, this is your proportional entitlement as of those valuation notices you received, minus any Surrender Rebate, if applicable (and more on this term below), multiplied by the final value they have at the end after all funds are sold, and then accounting for any withdrawals taken and taxes owed.
It’s quite straightforward, however, there are a few question marks still around tax and the treatment of certain assets outside the more standard platform assets, which will need to be signed off by the courts during the Application Hearing (more on that below). In terms of growth of the investments, that is explained further below, but the basic premise is that any gains will be reflected in the calculation via the “Final Total Value.”
Timeline
Part of the latest update also included an update to the timetable with the various dates of court hearings and other steps in the Distribution process, which have of course, like it is often with these types of situations, been pushed back extensively.
The three main dates to note now are:
- 22nd April 2025, which is the deadline for an interested party (Brite platform member, Trustee, 3rd party Vendor, adviser etc.) to notify the court that they wish to seek leave to appear at the Brite Distribution Methodology Hearing;
- and 7th May 2025, which is the date of the Hearing for Interested parties to be heard.
- 15th/16th September – Proposed Distribution Methodology Hearing
There will then be a court judgement confirming the Distribution Methodology, and then MGN will get the ball rolling on commencing with distributing funds back to Trustees and beneficiaries.
Given how often it feels like one step forwards, two step backwards when it comes to this Receivership, especially, given all the cross border complexity and things that keep coming out of the woodwork, our best guess for when you might expect to start receiving your funds back to your account is around October, but it would not surprise us if this dragged on a bit longer, and it wasn’t until the end of the year before the distributions were finally being made.
We know that is likely incredibly frustrating to hear, especially, with all the economic turmoil going on at the moment, but we just want to be pragmatic, and not get your hopes up too much, as we all know how much longer this has dragged on for than many of you first suspected. Essentially, we have learnt our lesson around getting too optimistic about this Brite Advisors Receivership and the MGN timelines!
Investment Growth & Client AUM Update
According to the latest shortfall analysis provided, which was dated 21st March 2025, due to positive market growth, whilst accounting for Trading and Receiver’s costs, the estimated shortfall in the value from 13th December 2023 had fallen from c.13% to c.2.4%. Now, that is not a particularly helpful bit of information in our view, as it does not take into account that the original source of the shortfall is still gone, and the money from the shortfall would have been invested as well.
We are also currently at the whims of the capital markets, and with global stock markets very volatile since this date, the shortfall is fluctuating a lot, and a point estimate, perhaps six months ahead of the funds being sold down, is not particularly helpful or worth focusing on too much given how much it could change between now and then.
The chart above comes from the weekly updates from the fund manager at Brite, where they provide information on the total return and a bit of commentary on markets and the portfolio.
Surrender Rebates
Now, this is one of the topics that we, at Cameron James, find ourselves having to discuss extensively with any Brite clients that get in touch with us, as the terminology used around this often led to much confusion, so we wanted to take the opportunity to try and explain to beneficiaries impacted just what this “Surrender Rebate” really is.
The Surrender Rebate is in fact the amount of a commission/establishment payment, that was originally owed to the initial bond provider, that is still outstanding. For example, in the past, a UK Pension to QROPS transfer that was then invested into an offshore bond had perhaps a 7-11% establish charge, of which a significant chunk was a commission payment, which meant as soon as the funds were received, the bond provider sent a portion of the establishment charge to the advisory firm that placed the business. According to SEC charges documents against some that were involved in advising US Residents to transfer UK pensions into QROPS, available publicly here, some advisory firms actually earned up to 7% of the original transfer value, of which some advice firms then provided up to half of that fee directly to the adviser as remuneration.
So, some clients were told their adviser was not being paid anything up front, but actually had large commissions applied, which were cited as poorly disclosed in the advice reports and transfer documents by the SEC. This may not apply to all transfers, but based on original advice reports provided to us by QROPS providers as part of the LOA or COA process, these numbers regularly would appear to tie through to what is claimed in that document. The last one we looked at for example was for a US Resident advised to transfer their DB into a QROPS in 2014, it had a 10% “Establishment Charge” repayable over 10 years, along with a 1% per annum (0.25% quarterly) Service Charge to the Adviser.
These commissions were then repaid via annual service charges (often called a “Regular Policy Management Charge”) taken from the investment bond portfolio, over a 7-10 year period. As time passed, the amount of the original commission left to repay fell, so the amount of commission and other fees outstanding shrank, which you may have seen if you ever got a valuation and saw the fund value, and then a “surrender” value next to it, the difference was the amount of initial commission and bond charges still to be repaid. None of this is unique to Brite Advisors, and is a common occurrence in the “offshore” advice market, although not as much as it once was.
Now, when Brite Advisors moved clients over to the Brite Platform, many of those commissions had not yet been fully repaid, with many having substantial amounts still owed. As such, rather than clients just repay the existing amounts owed upfront, according to MGN in the reports, Brite advisers forwarded an interest free loan, which effectively rolled over the commission repayment onto the Brite Platform, with repayment terms that then extended out another 10 years. We have seen this on several advice reports advising the move from an Offshore Bond to the Brite platform. Given that markets rose over this period, the reduction in ongoing charges by spreading out the payment, which was repayable regardless of what course of action taken, actually would have for many helped increase their net growth.
There are many Brite clients who have queried about these Surrender/Commission Rebates, and questioned whether they are still legally payable, contesting that if they signed up for a 10-year repayment schedule, why should they be forced to pay it back now. Now, whilst we completely sympathise with these views, in reality, even if it was possible to roll over a loan onto another regulated platform, which it isn’t in from our understanding, in our view it just creates another psychological anchor, both to a chosen provider but also to a chosen adviser, as they would be the one who would have to effectively provide another loan to you, so we would be advising Brite members to move on with a clean slate regardless. However, this is all rather redundant, as MGN have indicated the surrender rebates will be netted off before the proceeds are sent back anyway.
We also published a detailed blog specifically for US residents with Maltese QROPS, which outlines the challenges they face and highlights the importance of being fully informed before making any decisions on next steps.
Taxation Issues
There has been constant discussion around tax issues for Brite clients, and now there have been a few updates from MGN in their latest Report.
Australian Taxation: The main conclusion appears to be that there are little Australian tax consequences for anyone invested in the platform who is not resident in Australia. For those in pension wrappers, even though the platform was located in Australia, the same rules about gross roll up inside a pension wrapper apply to SIPPS and QROPS, so there should be no Australian tax to pay, especially as the vast majority of the assets are located outside Australia any way as well.
US Taxation: US securities, including ETF’s, are subject to withholding tax for dividends and some income, as per MGN, and there are apparently three years of outstanding calculated liabilities owed, amounting to $1.9m, but also two more years that need to be assessed, as the tax filings were not done for 2023 and 2024, so there will be further calculations and likely tax withholding payments to be made to the Inland Revenue Service (IRS).
Non-Pension Wrapper Taxation: For direct platform clients, based on the Distribution Method proposed, there will be a sale of assets, so any sort of capital gain will be subject to local tax rules of where the member is resident, so tax consequences will need to be sorted out personally, and won’t have any involvement from MGN. A forced sale is likely not ideal for some, and for those with substantial gains could involve large tax bills (so tax advice should likely be sought), but MGN have noted that they have little choice, as an in-specie asset transfer just isn’t possible in their view.
QROPS Transfer USA Taxation: According to the SEC Charging document referenced above, and from public IRS documents and opinions from US tax advisers, there may have been tax payable on the original transfers of a UK pension to a Maltese QROPS, but we can not be sure, so tax advice in our opinion should be sort. In regard to any ongoing taxation consequences of being in a Maltese QROPS, again, we aren’t tax advisers, but we do suggest all affected Brite members obtain tax advice, as important to make sure you have your tax affairs in order.
Currently, the US is looking to implement some new regulations around Malta Pension Schemes, further clarifying their treatment. In the proposed regulations, there are indications from those experts we have spoken with, and some Brite beneficiaries who have obtained tax advice, that there would be no exemption for many of the original transfers from a UK pension to a Maltese QROPS, but that could change, and these new proposed regulations do indeed need to actually be ratified by congress. At this stage, we just don’t have full clarity on the consequences of the original transfer, the consequences of having held a Maltese QROPS, what the consequences will be going forward of holding one, nor the consequences of transferring out to another country, although we have some ideas.
Given the outstanding uncertainties, and having had discussions with pension providers and tax advisers, we believe the most suitable option is to remain in a QROPS, at least until the new regulations are indeed passed by Congress, or we have more definitive statements direct from the IRS. Transferring out of Malta could potentially result in additional tax penalties and disclosure issues down the road, but again, seeking independent tax advice is advised.
We’ve covered this topic in more detail in our dedicated blog, available here.
Once the new regulations are in place, and if there is not going to be subject to any sort of negative tax consequence, then a transfer back to a UK pension very well may be a good course of action, but with the new proposed regulations not in place and the cloud of uncertainty that hangs over Malta and the IRS, in our opinion, and many tax advisers and pension specialists we have spoken with, it would be potentially unwise to transfer out to a new jurisdiction (i.e. back into a UK Pension) at this stage. However, you should confirm the most suitable course of action formally with a regulated financial adviser and/or knowledgeable tax adviser
Change of Trustee
Now, this is one area where some people reading this might be slightly surprised by our take, but we are not sold on this proposed alternative solution from MGN to assist those who are not fans of their existing Trustees.
The basic details are that MGN will allow a Trustee to be changed over whilst we await the funds to be unfrozen, but it requires the existing Trustee, the new Trustee, and the Beneficiary to all submit effectively a joint transfer request. Originally, MGN was going to allow members to stay on the platform for up to 12 months to sort out a change of Trustee.
There are also outstanding fees owed, and many schemes have Exit fees, so not only does the money need to be sent to a new Trustee, but some of it also needs to be passed to the old Trustee to extinguish that liability. That’s two sets of payments and likely regulatory disclosures, which will all also require involvement from MGN.
We know it might not be comfortable to see your big pot get sent back to a Trustee for whom you may have, rightly or wrongly, concerns, but it just appears to add hassle that isn’t necessary in our opinion, although completely your decision to make of course, regardless of what an adviser might advise you to do.
AFCA Complaint
Now, you may have seen some recent updates provided by MGN in regard to the news that the Australian Financial Complaints Authority, AFCA, is looking to expel Brite Advisors PTY on 13th May 2025 due to them being in Receivership, and that a complaint cannot be submitted once a firm has been expelled.
MGN have already responded to the AFCA after consulting legal advice and are exploring the option of doing a representative complaint on behalf of the entire Brite Platform members.
Now, we do not have any knowledge or experience with such things, so cannot comment on whether a complaint to the AFCA is the right course of action or will go anywhere, nor how it will work in conjunction with the cross border nature of Brite Advisors, but there are those that have made complaints we know of.
However, stay tuned, as it is likely that MGN will revert with further information on this as the deadline looms nearer.
Next Steps for Receivership
The Distribution Methodology Hearing is tentatively scheduled for 15th/16th September 2025.
Once the Distribution Method is formally approved, the next steps will be something along the lines of: calculate and confirm amount of Retained Fund, confirm tax liabilities to pay, sell down the platform assets, confirm each beneficiaries' entitlement (using the calculation discussed above), make sure the funds are in the correct currency for each beneficiary, make sure Trustee documentation is up-to-date (including banking details), and then process the payments.
Again, just to bring up again, our best guess for when this might be all sorted and the funds ready to be sent back to your Scheme Trustee is around November/December.
Next Steps for Brite Clients
Now, I appreciate we have said this for quite a while, but now really is the time to get yourselves organised and ready to move forward once the Brite platform funds are released back to you or your Trustee. The key pillar of that will be choosing an adviser, which we have discussed above, and then from there, having made your decision after seeing what their advice is, do all your due diligence to make sure you are comfortable with their advice and fully informed about the course of action that will be taken once the funds are released.
Standard guidance on finding a good adviser applies, which is in previous blogs but also nicely documented in a guide we put together here, where we go into detail on 12 key areas to do your due diligence. It is by no means foolproof, as advisers can omit things, and even those that tick all the boxes may not actually be any good or provide much value for money, but it should go a long way to assisting you in finding the right type of adviser moving forward, and hopefully, if you choose wisely, it will be the last adviser you ever use!
For US Residents, one good tool to use for, although for US advisers there is a regulatory obligation to share much of the details on there anyway, is the SEC’s registry, the IAPD, which is accessible here. You can search for the specific adviser you are speaking with, and see their US advice employment history and find out other pertinent information about them.
For those resident outside the US, there will be local regulatory registers to help you do your due diligence on your adviser, such as the FCA Register for UK residents, but one good tool you can use, which all Brite clients can use, is to add yourself to the FB Group I have mentioned before. The Group is accessible here, and there are other Brite specific groups available, which you can obtain access to if you post in the original group I have linked to. There is plenty of discussion of Brite and related parties in there, and you will find that a very helpful tool whilst conducting your due diligence, as any advice firms or advisers you are speaking with may be referenced in there, either positively or negatively.
You can also use this time to do proper financial planning with them, looking at your entire financial situation and helping you plan and fund your retirement goals, rather than just focusing on investing your UK/Malta/Gibraltar pension assets, and getting real value-added financial planning from them.
That way, with c.3-4 months, with our best guess, for the money to be released, you can be in a position where you and your family are fully comfortable with your adviser, the new pension provider, if applicable, the new investment provider, the underlying funds and the actual value add ongoing planning you are going to receive. You can then sort out a change of agency with your Trustee, which still does not fully commit you to working with that adviser as the funds are frozen, but does mean you are as far along in the process as can be, and quite literally can’t be doing more.
As mentioned above, there is probably lots of simple financial planning you could be doing together, picking up those small “wins” that will just compound and make a huge difference for you in the future.
Still Have Questions? We're Here to Help
We know this process hasn’t been easy, and with so much legal and financial complexity, it’s normal to feel overwhelmed or unsure about what to do next.
That’s exactly why we’re here.
✅ Book a Call with an Adviser – Whether you need clarity on your projected entitlement, Trustee options, or potential tax implications, our team is ready to walk you through it.
✅ Get Organised Before Funds Are Released – Use this time to gather your documentation, review your latest valuation notice and make sure your Trustee details are up-to-date.
✅ Understand Your Options – We’ll help you evaluate whether your current Trustee/wrapper are still right for you and what steps to take if not.At Cameron James, we’re here to support you through this complex and stressful period. If you'd like to speak with one of our advisers, you can book a free consultation here. We will help you understand your position, clarify your options and make informed decisions with confidence.
Important Points ✏️
The purpose of sharing this update is helping those that may be affected by the Brite Receivership to be in a more informed decision, so that going forward they can make decisions that will allow them to achieve what they want with their retirement and pension capital.
Whether that be with Cameron James, an existing advisor, or another financial advisor. Knowledge is power when it comes to financial planning, and very often there is a knowledge gap between clients and financial advisors, which is often what can lead to clients having less than satisfactory outcomes in our experience over the years.
Our goal is to make sure that sound and well thought out decisions are made on this Brite topic and those affected will be able to move on from all of this as best they can.
The information in our blogs are sourced from publicly available information, and discussions with those affected. As always, nothing in here should be construed as formal regulated advice and we always suggest getting in touch to have a full understanding of your situation.
And as with all clients, whether it is their first pension transfer, or resolving a situation such as the above, we recommend all clients to seek a regulated advice report from two or more financial advisory firms they believe to be reputable and have their best interests at heart.
In our experience, this typically allows clients to make more educated and informed decisions. Including clear comparisons on important things such as cost, performance, and also level of service and what will be included in their ongoing advice, such as Voyant cashflow planning analysis specific to their country of residence and taxation system.
Costs also an extremely important topic to analyse in detail, over the course of the years, we have had many non-UK resident clients come to us and say they’ve had a recommendation and the total cost are XYZ. Only for us to do a full free analysis for them, to help them understand that is actually not the total expense ratio (TER) of their underlying portfolio they have been advised. Highlighting any cost which has not been included in the advice report, for them to have a clear understanding of what their total cost will be to the pound and the penny.