The Financial Services Compensation Scheme is focusing an investigation into failed advisory firm TailorMade Independent onto recommendations to transfer into self-invested pensions that were exposed to high-risk investments such as overseas properties marketed by Harlequin.
In an update, FSCS says it is continuing its investigation into TailorMade to see if it is able to pay compensation and that it is ‘particularly’ focusing on recommendations to transfer pensions into self-invested schemes which were then invested in Harlequin and Green Oil Plantations.
Although the firm has not been declared in default, it has been placed in creditors voluntary liquidation. Should the firm be declared in default and the FSCS deem claims to be viable, claims would fall on the advisory sub-classes.
The scale of any likely compensation is not known.
TailorMade went into administration in September of last year after ceasing taking on new business on 20 January and launching a review of its advice processes.
In January of last year, then-regulator the Financial Services Authority issued an alert warning advisers over recommendations for clients to invest in Sipps heavily weighted towards Harlequin Property-owned real estate.
Later (18 June), the Financial Conduct Authority issued another warning to advisers after a Caribbean-based Harlequin subsidiary made a fresh approach to Sipp clients looking for further investment.
In an interview with FTAdviser, Harlequin chairman David Ames said the effects of the regulators’ warning on the company’s income had been partly behind the decision to put sales arm Harlequin Management Services (South East) into administration.
