Liquidated adviser firm exposed to troubled legal fund

Liquidated advisory firm 20Twenty Independent, which entered liquidation proceedings earlier this year amid complaints over controversial tax-mitigating film schemes, could be the subject of further claims relating to investments in the troubled Axiom Legal Financing Fund.

According to an investor who wished not to be named, he was advised by Totus Wealth Management, which according to FCA register was a ‘trading style’ of 20Twenty, to invest in an SEB portfolio fund, of which one underlying fund was the Axiom vehicle.

Following the closing down of the Axiom fund, the investor said in his opinion based on information he has gleaned retrospectively it may never have suited his risk profile. He is currently claiming through the Financial Services Compensation Scheme to try and recover his loss.

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20Twenty entered creditors’ voluntary liquidation in October. According to a directors’ report compiled following a meeting of creditors, the directors of the firm attributed its failure to increased restrictions and costs relating to its professional indemnity cover.

Totus Capital, a legally separate sister company of 20Twenty that also uses the Totus brand and is registered at the same address, has taken on a number of clients of the firm along with eight advisers. Liabilities remain with 20Twenty, which is now in the hands of liquidators CMB Partners.

The Axiom Legal Financing fund was placed into receivership in February. The fund’s investment manager, Tangerine Investment Management, was sacked from its role in November 2012 following the suspension of trading in the fund’s shares.

Taylor Moore, the UK-based distributor of Axiom, was placed into liquidation in June of this year. Although the Financial Services Compensation Scheme has yet to confirm if it will compensate investors, such compensation could lead to a £100m cost to advisers if FCA-regulated Taylor Moor, cannot meet any claims.

The investor said: “I did some research... and found information that had I been aware of before my investment I would definitely not have proceeded.

“When Totus [Wealth Management] did a risk profile on me my attitude to risk was [defined as] cautious to balanced. However, I found a [disclaimer] on the internet that Axiom ‘should only be made for the long term and by those for which security of capital is not essential’.”

Christopher Deacon, compliance officer for Totus Capital who also previously held a compliance function at 20Twenty, confirmed that Totus Wealth Management had sold the Axiom fund.

He recommended the investor contact the liquidators of 20Twenty, CMB Partners, if he is unhappy with the result of any complaint.

Following the liquidation of the company’s existing PI insurer in 2011, 20Twenty’s PI premium increased, its excess doubled and an exclusion was added for film schemes, which were its specialism. In 2012 it was offered a syndicated policy and saw its excess, premium and restrictions increase further.

The firm was the subject of five Financial Ombudsman Service rulings earlier this year that saw redress awards of £500,000.