Financial Services Compensation Scheme  

Two advice firms fail with BSPS and mortgage claims

Two advice firms fail with BSPS and mortgage claims
Dimitris Vetsikas/Pixabay

The Financial Services Compensation Scheme has confirmed the failure of two advice firms, one of which provided pension advice, while the other provided mortgage advice.

Mercia Financial Planning Limited, has attracted 25 claims so far, all for pension transfer advice - including to do with the British Steel Pension Scheme.

The other firm which has failed, FSP Limited, has two claims against its name. One relates to mortgage advice, while the other relates to equity release advice.

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Both firms failed yesterday (September 6).

An FSCS spokesperson told FTAdviser: “Home finance-type failures and claims are much less common for us.

“In the last financial year, we had 397 home finance claims in total, versus 8,895 in the class that includes pension and investment advice.”

There is one claim in the Fos database against FSP which dates back to 2012 and alleges the advice firm mis-sold a client an equity release mortgage secured on the house.

The Fos did not, however, uphold this complaint.

Last month, The Times reported on a case relating to FSP’s mortgage and equity release advice.

A woman said she was advised by the firm to take out two mortgages - one buy-to-let and the other equity release.

She said she then used the proceeds of the mortgages, some £370,000, to make four separate investments in the Resort Group - an offshore luxury property developer which prompted £5.9mn to be paid out by the FSCS on claims over advice relating to its products.

The bank which approved her four transactions to the Resort Group, Santander, has now refunded her the bulk of the investments, according to the report.

FTAdviser asked the Financial Ombudsman Service for a record of any complaints related to this case, but none have been published on the database.

FSP Limited was dissolved in September 2021.