Investment advisers will be forced to pay the cost of compensating clients of a failed IFA who mis-sold high-risk unregulated investments, after the Financial Services Compensation Scheme declared the firm in default.
In its latest update for the period from 1 November to 31 December 2015, the FSCS listed 11 firms within its investment, life and pensions categories where it is now accepting claims for compensation, including Turnberry Wealth Management.
Turnberry, which entered liquidation last March, lost at least three cases with the Financial Ombudsman Service before it collapsed.
The Fos ruled the IFA advised clients to invest in high risk unregulated schemes that were unsuitable for them.
One was an investment in a scheme that could have resulted in 100% loss of capital, in order to reduce the client’s tax liability.
In another case, Turnberry recommended a client borrow money to invest in an unregulated scheme, also to save tax, that would leave the client with about 50% of his non-pension assets in unregulated investments.
The third case the Fos upheld against Turnberry involved a client being advised to invest in three unregulated collective investment schemes (UCIS), three years before she planned to retire without a personal pension.
Other firms now in default include, in the east of England, Essex-based Taylor Burr Associates Limited, in the Midlands, Solihull-based Lifestyle Future and Sutton Coldfield-based Allen Financial Management Limited.
In the north east, Cleveland-based Argentum-Lex Wealth Management Limited and Doncaster-based Mortgage Processing Centre Limited were both in default, while in the south east it was Dover-based The Joseph Bevan Partnership, and in the south west Weston Super Mare-based BlueInfinitas Limited.
The only Welsh firm in default was Denbigh-based Cathedral City Wealth Management Limited, while in Scotland there was Edinburgh-based Alba Asset Management Limited and Glasgow-based Affiliate Financial Services Limited, along with Turnberry.