The Financial Services Compensation Scheme has received 270 claims against a trustee which allegedly failed to carry out sufficient due diligence on some unregulated investments.
London-based Highpoint Trustees, formerly known as Citadel Trustees, defaulted with the lifeboat body earlier this week (May 18) after being dissolved on September 12, 2020.
The lifeboat scheme began receiving claims against the firm back in September 2020 with claimants alleging that Highpoint Trustees failed to carry out sufficient due diligence in respect of non-standard investments for which the firm acted either as trustee or escrow agent.
But the FSCS is yet to pay out any compensation.
In a statement in September, the FSCS said: “This is a complex area and we are working closely with our legal team, the firm’s administrators and other third parties, to establish what regulated activity may be protected by FSCS and what levels of due diligence the Firm carried out.”
In an update in February 2021, the FSCS said it was in the final stages of its investigation into Highpoint Trustees.
It said it had started assessing some sample claims that related to the following investments: Sustainable AgroEnergy Plc, EcoPlanet Bamboo, Merco Bonds, Forest Lakes, Global Forestry Investments and Eco-Synergies ltd.
Adviser firms have seen their FSCS levy rocket recently due to firm failures and rising claims in the pensions and investments market.
Back in January, the lifeboat scheme had forecast its levy for the year to be £1.04bn, which was a jump of 48 per cent on last year’s total.
But the FSCS cut this by £206m to £833m earlier this month (May 13), as it expects firm failures and some claims to be delayed over the next few years.
Advice firms are still expected to contribute £240m to the levy. This is the same as last year, due to the fact the class is forecast to breach its funding limits for the second year in a row.
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