Towergate was established in 1997 and came to be known as Europe’s biggest independently-owned insurance mediator. The company functioned through five basic operation areas: Broking, Underwriting, Networks for independent brokers, Paymentshield, and Towergate Financial. Some 2007 estimates suggested that Towergate was valued at £3 billion as it traced a path toward a public listing. Unfortunately, things took a turn for the worse in 2008 when the company was obligated to renegotiate its banking contracts.

Towergate Financial Services Intermediate was founded in January 2008 as an independent company to unite regional IFAs and the firm successfully raised £100 million to build twenty acquisitions by the end of the year 2008. It was successful in getting nine companies and one book of business. The dawn of the credit crunch stopped any chances of further acquisitions and the hopes of a public listing. At this time, the thought of a collapse of Towergate Financial Services was unimaginable.

In October, the capital gains tax hike to 18% (from the previous 10%) forced hundreds of company directors to sell holdings before the changes were enforced. This left the management running to find ways to control the damage. The owners of Towergate tried to offload a 25% share of Towergate for roughly 800 million pounds before the rise in taxes took effect. This proved to be a difficult task as talks with some companies fell through after days of negotiating.

The board of Towergate ended up putting the financial services branch into administration in June with the help of the controversial pre-packaging procedure. Pre-packaging is a procedure of disposing the assets of a company instantaneously after entering administration. In this procedure, usually the preceding directors or team of management buy the assets of the company from the administrating institute. In this case, one of the other four Towergate branches bought the ten IFA firms that were owned by Towergate Financial Services form the administrating institute. This method of surviving was not entirely appreciated by the creditors.

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The collapse of Towergate Financial Services left some creditors disgruntled and they felt they had been shafted. It was their belief that only the owner of Towergate came out of this situation well. The sources in touch with the owners rebut insinuations of a stitch-up. They claim that by buying the IFA businesses back, the owners are taking a great risk and there is no guarantee that the lost money will be recovered in the long term. They claim the purpose of the buyback was to save more than 200 jobs. According to recently disclosed accounts, Towergate made over 100 million pounds in earnings before taxes, depreciation, and interest in 2008. Two American hedge fund companies also hold stakes in Towergate.

According to some reports, it is believed that the executive chairman of Towergate Financial Services may have lost 17 million pounds of his own money, while the chairman of the company may have lost 600 thousand pounds from his private funds. These figures, however, are not enough to satisfy the creditors. Pre-packaging is just one method of recovering these funds.

After being rolled into a larger branch of Towergate, it still operates from there. It has recently managed to buy a mortgage advisory business that was in trouble in an effort to boost its high-net-worth and small to medium-sized enterprise. The newly acquired mortgage firm was founded in 1974 and sold in 2000 for 100 million pounds. In 2008, it was again put on the market with a price tag of 50 million pounds.

A WikiLeaks report lists Towergate as one of the 205 establishments from around the world that owed between 45 to 1,250 million Euros to a bank operating in 13 countries. Most of the loans were unsecured and the bank has since collapsed. Currently, Towergate is holding talks with a US-based private equity firm for cash inflow of 200 million pounds.