The first art advisory firm to be regulated by the UK's Financial Conduct Authority has just opened its doors to trustees, banks and family offices.

Cadell + Co, the advisory firm that specialises in art held in trust, helps wealth managers and trustees preserve and increase the value of art portfolios through a database, management and reporting service. It also provides quarterly portfolio management reports for trustee/beneficiary review.

Cadell's licence from the UK's financial watchdog, the Financial Conduct Authority, marks a turning point in the art advisory business which, up until now, has been completely unregulated.

This seems to be a timely occurrence. Last month, one of Mayfair's most high-profile art dealers, Timothy Sammons, found himself accused of a multi-million pound swindle over missing payments. The sheer scale of price escalation in the current market has made such frauds - to which Cadell purports to offer a solution by matching buyers with sellers in a more orderly and respectable way - more likely.

Luke Dugdale, who oversees Cadell’s advisory and strategic services as head of wealth management, told our sister publication WealthBriefing: “Any auction house or dealer that brokers art represents a conflict of interest to trustees – you know when they walk in that they’re looking for what’s best to sell their clients.

"In an opaque world, being FCA-regulated means we are committed to complete transparency and not being conflicted. In other words, we only work for one side, and will publish our dealings to the clients. Having operated for many years in a regulated environment, I really want to be able to bring this to the trustees who I feel a strong affinity with.”

Dugdale, formerly a senior wealth manager at RBC Wealth Management, says that the new business stems from a need he spotted for some sort of management system to monitor the significant portion of trusts that are art-related and for the same level of portfolio management for artistic investments as for other investments. He told WealthBriefing: "Having on average 15% in art administration represents a significant challenge to trustees’ fiduciary responsibilities."

Richard Bagnall-Smith is Cadell’s head of client management and sales. He previously served as global chief marketing officer and head of business development at Christie’s, where he became familiar with the 'casino' side of the art market.

Bagnall-Smith told WealthBriefing: "The noise in the art industry comes from the auction side, which at the top is driven by speculation, while trusts have a longer term and more professional approach. They really are the sleeping giant in the industry.

“All trusts have gone through a major shake-up of how they look at property and art is next on the agenda.”

Art collection is nothing new but a large part of the nouveau riche is buying a great deal of art and putting it in trusts, whereas historically they would not have done so. More than three-quarters of art collectors "buy for passion" with an underlying wish to make a good investment - up from 53% in 2012, according to a recent report by the accountancy firm of Deloitte.

Indeed, art, alongside other “investments of passion” such as classic cars, has over recent decades come into its own as an asset class. There are at least 400,000 art collectors in the high-net-worth and ultra-high-net-worth market, with an estimated $1.5 trillion of wealth in art assets, according to the Deloitte report.

Richard Camber is the third founding partner of Cadell & Co, responsible for helping HNWs acquire masterpieces. Before Cadell, he was president of ArtBanc International, and formerly senior director of the works of art division at Sotheby’s.

He said: “Many trustees have concerns about the current value of the art collections they’re responsible for. Works of art held in trust have often been in the owners' possession for decades and, in that time, the value of individual pieces may have fluctuated dramatically; some may not have been valued at all.

“Our role will be to guide trustees and wealth managers in staying informed on the current and future valuation of their collections, to ensure they make the best decisions for clients.”