The Financial Ombudsman Service currently has around 25 complaints waiting to be handled in relation to collapsed wealth management firm Full Circle Asset Management.
Administrators are currently working to establish how much money is available from the business, with a possible sale in the pipeline, to determine whether or not these complaints will fall to the Financial Services Compensation Scheme.
The complaints received by the ombudsman mainly relate to advice people received when they were sold investments, particularly that the advice they were given wasn't consistent with their attitude to risk.
Last year Full Circle was told to pay damages to a client after it was found to have deviated from the risk profile and failed to sell poorly performing assets.
David Rocker took Full Circle to court after his £1.5m investment fell by more than 50 per cent, alleging the losses were caused by the firm's breaches of the contractual terms over how it managed his money.
Not long after this, Full Circle entered administration meaning complaints against it could fall to the FSCS if there is not enough money to pay any compensation which may be due.
Mark Philips, who is handling the administration, said the compensation for the Rocker case had not yet been paid and he would be having a meeting shortly looking to addressing this.
He said: "As administrators we have a pot of money and that is put towards the creditors of the company.
"Whether there is a sale will affect what the overall pot will be. What I cannot say at this stage is how much people are likely to get because we have not signed on the dotted line for a sale.
"If the company is insolvent it may well be that we may look at pushing the complaints over to the FSCS but it depends."
A spokesman for the ombudsman said it has taken longer to process complaints against Full Circle because in 2014 the company had attempted to overturn one of its decisions in the courts.
Full Circle had claimed the ombudsman's decision was inconsistent with guidance it had been given by the Financial Conduct Authority but a judge disagreed and threw the case out in early 2017.
A spokesman for the Fos said: "We are currently liaising with the administrators to ascertain what impact the administration will have on our casework."
The FSCS has been asked to comment.
damian.fantato@ft.com
