Anthony Philip James & Co (APJ) is preparing claims on behalf of 100 investors in Invest US Limited, a failed company which bought up repossessed properties in Detroit, Florida and Chicago following foreclosures after the financial crisis.
The Financial Services Compensation Scheme (FSCS) has already paid out £16m in claims against an advice firm entangled in the sale of the investments.
But the lawyers believe a further £7.3m could be unlocked in top-up compensation for those who invested more than the £50,000 statutory limit the FSCS can award from other entities.
According to FSCS data, Shah Wealth Management attracted a total of 1,603 claims for its part in setting up Sipps for the purpose of investing in a suite of regulated and unregulated investments since it was declared in default in November 2016.
The lifeboat fund, which is funded by regulated financial services firms, upheld 1,305 Sipp claims against the adviser as at March this year, including 121 related to Brisa Investments; 352 to Invest US; 126 to Lakeview UK Investments; 2 to Real Estate Opportunities; and 36 related to Tambaba Investments.
It has rejected 164 claims related to these firms and a further 134 were still in progress in March.
Shah Wealth Management was responsible for a total of £11m Sipp claims; £147,000 Ssas claims, £4.2m of pension transfers; £538,000 related to unregulated investment schemes and some £250,000 in additional advice-related claims.
The FSCS has confirmed the cases fall on the life and pensions Intermediation class and will be paid for by firms in that class.
Investments in Invest US Limited formed the bulk of the claims.
APJ says the investments were made on an advised basis via unregulated introducer Avacade.
It is alleged Avacade conducted free pension reviews and promised people more lucrative returns than their pensions would have offered.
It then enlisted Shah Wealth Management to carry out risk reports on the suitability of the investments on a one-off basis, according to the lawyers at APJ.
Glyn Taylor, solicitor at APJ, said: “Avacade and the IFA, which have both now been liquidated, undertook a significant amount of business with a small number of Sipp operators.
“Avacade gave no indication to our clients of the high-risk, non-standard nature of InvestUS. Clients believed they had chosen to put their hard earned pension pots into a safe scheme with a high return.”
Last November Avacade became the subject of legal proceedings brought by the Financial Conduct Authority (FCA), which alleged they were wrongly carrying out regulated business.
The case against Avacade and against Craig Lummis, Lee Lummis and Raymond Fox is still ongoing.
The regulator alleged Avacade, alongside another firm, provided a pension report service which was marketed as summarising a consumer’s pension information and retirement objective, to help people make decisions on their retirement savings.
Avacade then promoted self-invested personal pensions (Sipps) and investments in alternative investments such as tree plantations, the FCA said.
Both firms are now in liquidation, according to the FCA statement from November.
carmen.reichman@ft.com
