The investors backed funds managed by Stirling Mortimer, which were unregulated and invested in the development of overseas property in places such as Spain and Cape Verde.
British financial advisers sold the funds to investors who poured £91m into them, invested mainly via their self-invested personal pensions.
But a series of hits, ranging from fraud by one of Stirling Mortimer’s lawyers to allegations of mis-management and the impact of a downturn in the global property market following the financial crisis, meant investors saw their capital largely disappear.
But unlike in the case of other similar schemes, the compensation body has refused to write down the value of the Stirling Mortimer funds to nil.
As a result of this investors have received compensation payouts of only around 20 per cent of the value of their investment, according to lawyers acting on their behalf.
Michael Cotter, solicitor advocate at FSLegal, said some of the group of eight investors he acts for are elderly, and fear they will not live to receive a full compensation payout.
He has now written to the Financial Services Compensation Scheme demanding an update on his clients’ case.
“We strongly request the FSCS clarifies the situation,” Mr Cotter told FTAdviser, “and put to bed these people’s hardships”.
It is terrible that these elderly people are now facing a cash strapped retirement but why should you have to pick up the tab for them ploughing their cash into an unregulated scheme?
It is terrible that these elderly people are now facing a cash strapped retirement but why should you have to pick up the tab for them ploughing their cash into an unregulated scheme?If regulated advisers pushed these schemes claiming their cash was covered in the event the investment failed to deliver, then it is these advisers that should be pursued and not by the regulator but by the police.
Because if they did claim the cash was safe then I really believe the law needs to recognise that amounts to fraud.
Fraud is wrongful or criminal deception intended to result in financial or personal gain.
How can claiming your cash is safe when actually you could lose it all anything other than fraud?
However, if these clients were warned they could lose every penny if these properties failed to materialise then I am afraid they must accept some of the blame.
Whatever happened to caveat emptor?
I always understood that if I bought cheap as chips perfume being sold out of the back of a lorry down the local supermarket if I then developed a nasty rash, I had nobody to moan to but myself.
If I paid a pretty penny to buy a brand name that claimed to be safe for all skin types off a high street retailer and developed a rash, I knew I was well within my rights to demand my cash back.
It is unfair for good financial advisers to have to pick up the tab for unregulated investments.
If advisers are found to have lied and pushed this type of investment as safe then it is those advisers that should be pursued by the authorities and the money they made by pushing these products confiscated and given to those who were left out of pocket.
emma.hughes@ft.com
