Even more people may now be entitled to compensation in relation to bad investment advice in Harlequin investments after the Financial Services Compensation Scheme (FSCS) conducted yet another review.
The FSCS is already paying claims against firms for negligent mortgage advice and pension switching where the underlying investment was in a Harlequin resort.
Now it is to widen the net to include claims for negligent advice to invest directly in Harlequin after it uncovered new evidence indicating products through which investors accessed Harlequin developments were potentially unregulated collective investment schemes (Ucis) and as such, designated investments for regulatory purposes qualifying for FSCS protection.
Thousands of people were advised to remortgage their home and /or transfer funds from an existing pension scheme into a Self-Invested Personal Pension (SIPP) to fund investment in Harlequin, which was promising investors high returns by building off-plan homes in the Caribbean which would then be sold to make a profit.
Although Harlequin was an unregulated property investment scheme dealing with luxury hotels in the Caribbean, it seems to have been recommended to UK investors by various financial advisors and other intermediaries.
It is reckoned that Harlequin has taken about £400,000,000 from investors to invest in various property developments across the Caribbean.
Unfortunately for investors, many of the properties were never built. A big problem for a number for reasons:
Help from the FSCS
The FSCS is the UK’s statutory fund of last resort for customers of financial services firms. It can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it.
It is already paying compensation to Harlequin investors where the financial adviser was ‘in default’ covering when the adviser has gone bust, ceased trading, has insufficient assets or cannot meet the claim for another reason.
The FSCS has already concluded that many advisors on many schemes were negligent and has so far paid more than £60 million to people badly advised to enter into these schemes.
Importantly, this latest FSCS latest review paves the way for more people who may have been mis-sold a Harlequin product by their financial adviser to make a claim for compensation.
Wards Solicitors’ James Taylor specialises in Financial Services disputes. To find out how the latest FSCS announcement could affect you, please contact him to discuss any potential claim for compensation.