Fraudster's advice firm declared in default

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Fraudster's advice firm declared in default

The Financial Services Compensation Scheme has declared in default the wealth management firm of an adviser jailed for his part in running a Ponzi scheme.

The FSCS declared HBFS Financial Services Limited (HBFS) in default, following the imprisonment of the firm’s former managing director, Freddy David, seven months ago.

The announcement, which dates back to December, has paved the way for his victims to claim compensation for their loss, as the lifeboat fund pays out on behalf of firms it has declared in default.

In July 2018, David was sentenced to six years in prison in after pleading guilty to defrauding 55 victims of more than £14.5m.

An investigation by the City of London Police's Fraud Squad found that between 2005 and 2017, 49-year-old David had been running a Ponzi scheme through HBFS.

The fraud was running in parallel with legitimate HBFS business, with David using the company’s name as a means to defraud victims of between £20,000 and £750,000 per person.

HBFS was one of six firms declared in default by the FSCS in December, including Cheshire-based investment managers Gann Management Limited and Oxon-based Seren Independent Advisers Limited.

This means the FSCS is satisfied these firms are unable to pay claims for compensation made against it and it paves the way for clients of the firms to make a claim for compensation of up to £50,000 per investment.

Alex Kuczynski, chief corporate affairs officer at FSCS, said: "FSCS steps in to protect consumers around the UK when authorised financial services firms go bust.

"This vital service, which is free to consumers, protects your deposits, insurance, investments, home finance and debt management.

"We want anyone who believes they may be owed money as a result of their dealings with any of these firms to get in touch as we may be able to help you."

rachel.addison@ft.com