FSCS pays out £5.9m on offshore property advice

The claims relate to assets sold by 19 UK advisers, including Active Wealth, known for its involvement in the British Steel pension transfer debacle.

The sales were often tied to pension transfers or remortgages and many of the advisers who sold them have since gone out of business. To date 424 claims have been brought against advisers in relation to TRG products.

TRG is unregulated and still trading, and as such would not qualify for FSCS protection. However, as the products were sold by UK regulated advisers the FSCS has agreed to accept claims. 

The lifeboat scheme has also adapted the way it calculates perceived losses stemming from the investments, valuing many at nil to allow for claims.

It recently told FTAdviser: “As part of FSCS’s investigations we will seek to establish if the investment holds value, as FSCS does with the hundreds of other investments we deal with. 

“The TRG investments relate to holiday resorts that have been built and are largely operational, with the investment manager still providing valuations. 

“As with investments of this nature, we continue to monitor the situation closely; and following updated reviews of the issues with the different types of investment in TRG, [we] allowed customers with full ownership of units to utilise independent valuations and customers with fractional memberships to utilise nil value for the purposes of compensation calculation.”

Troubled investment

The Resort Group's property assets, four hotel developments in Cape Verde, were sold in the UK over the past decade in one of two ways - whole hotel rooms and fractional shares in rooms. 

The group also offers a range of corporate bonds.

FTAdviser reported in 2018 how many investors claimed they had been promised guaranteed returns on their investments, only to be disappointed by the returns that materialised - leaving them with Sipp fees that accounted for much of the returns they did receive. 

Like many hotel groups across the world The Resort Group has also been impacted by the coronavirus crisis and associated lockdowns.

In an email to a UK Sipp investor this month Charlie King, COO of The Resort Group, admitted investors may find it difficult to part with their assets during the pandemic as there was now almost no buyer interest in fractional stakes in the group’s properties.

TRG investments - and the way they were sold - were put under investigation by the Financial Conduct Authority in 2017. FTAdviser understands that probe is still ongoing.

FSCS claims in relation to TRG to date:

Source: FSCS

carmen.reichman@ft.com