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Advisers ready to fight claims after report into collapse

Advisers ready to fight claims after report into collapse

Advisers with clients facing combined losses of up to £25m on investments into property funds associated with failed promoter Propertybourse have seized on the findings of a scathing interim report from administrators to help defend claims already progressing with the ombudsman.

The report - which claimed the failure of the underlying funds throughout 2011 and 2012 was a result of chronic underfunding that was not fully disclosed - gives advisers hope that the findings will absolve them of allegations of poor advice.

A spokesperson for the Financial Ombudsman Service confirmed it is “investigating a number of cases about Propertybourse”.

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Stephen Dockerty, principal and IFA at Activate Financial Management, who is subject to claims, said the ombudsman was “eager to make a ruling”.

Delays to judgements have apparently been caused by an ongoing FCA probe and Malcolm Fillmore, the joint administrator at BM Advisory, told FTAdviser he had shared his findings with the regulator. A spokesperson for the FCA said its policy is never to confirm or deny ongoing investigations.

Mr Dockerty had nine clients invested in the funds and told FTAdviser that the majority of them have seen a copy of the report and already have contacted their own legal advisers. He was one of the first to raise concerns about the funds after contacting the FCA in 2011, but with no official response.

“I sent Fos my final submission last Thursday. This was a robust defence using the key facts from the liquidator’s report, plus other issues aligned to suitability aspects to my client.

“I feel the legitimate arguments I have raised could provide a robust defence in civil law in time even if I am ruled against by Fos.”

Another factor is claims against advisers, which if found to be legitimate would result in costs being attributed to the investment adviser sub-class at the Financial Services Compensation Scheme.

The FSCS has already appointed Deloitte as the case handler for compensation claims, FTAdviser can disclose. Mr Dockerty said that the scheme has started writing to investors involved, adding he has also sent them a copy of the liquidator’s confidential report.

The FSCS told FTAdviser that it had “only received a few claims” and added that “the report doesn’t change anything, as FSCS looks at the status of the fund and the position of it”.

Paul Yallop, principal at Parklands Financial Advisers, who has a couple of clients invested via a “rogue adviser” that has now left the firm, said that one of them spoke to a case handler at Deloitte earlier last week.

“Deloitte claimed to have all they need to make a decision, but they didn’t know about the BM Advisory report. The FSCS said some time ago they would hold off on cases until they had seen the report, so I’m not sure what’s going on.

“Pensioners have been robbed of their retirement income and IFAs could be potentially be put out of business,” he added.