Financial Services Compensation Scheme  

FSCS reverses default on former IFG subsidiary

FSCS reverses default on former IFG subsidiary

The Financial Services Compensation Scheme has withdrawn its declaration of default relating to IFG Financial Services Limited after finding liability for any claims may sit with another firm, which is still in business.

The lifeboat scheme, which is a last resort for compensation if no firm can cover redress for a claim, declared IFG Financial Services Limited in default last week.

The subsidiary, previously called IFG Life & Pensions Limited and trading as Goldstone Financial Service, was once part of IFG Group.

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The FSCS had told FTAdviser there were five claims against the firm, but only one was upheld. This related to pension transfer advice.

“The single valid claim is what has triggered the firm to be declared in default,” an FSCS spokesperson said last week. The claim is now in the final calculation stage for payment.

But in an update today (November 8), the FSCS said it had subsequently become aware that liability for any claims against IFG “may sit with another firm that is still in business”. 

It added: “The FSCS is currently speaking to this firm to establish where customers should direct their IFG claims.

“In the meantime, FSCS has withdrawn the declaration of default and amended its records accordingly. This means that FSCS is no longer able to consider claims against the firm.”

The identity of this potentially liable firm has not been revealed. 

An application to dissolve IFG Financial Services Limited was filed on August 15, 2019, before IFG Group was sold on to a private equity company. It was then dissolved via a voluntary strike-off in December 2019.

It is rare for the FSCS to reverse a default decision.

Northampton-based advice firm Better Retirement Group was declared in default, only for this decision to be reversed before it fell back into default.

Better Retirement Group is currently under investigation following a number of pension transfer claims made against it, most of which relate to pension transfer advice, including advice given on British Steel Pension Schemes.

IFG Financial Services Limited’s accounts

IFG Financial Services Limited's last full accounts on Companies House states the business made a profit of just £1,119 in 2018 after posting a loss of £52,276 in 2017.

It put the loss in 2017 down to the reversal of an accrual for commission due on an IFA, which was paid in 2016.

When the company was dissolved in 2019, IFG Financial Services Limited's total assets were £2.6mn and total provisions were £113,673.

It said the provisions covered legal expenses “relating to the sale of business, which completed in 2014”. It estimated £43,544 of the provisions would be used in 2019. 

Until 2014, IFG Financial Services Limited operated four offices across the UK. But in September of that year, the business and assets were sold to Ascot Lloyd, according to Companies House.

After this, filings say it became an investment holding company. Claims with the FSCS are against the investment holding company IFG Financial Services Limited.