Clients of two brothers jailed for their part in a £17m fraud have so far submitted claims worth more than £6m to the Financial Services Compensation Scheme, mainly in relation to advice.
Earlier this month the lifeboat fund declared Vantage Investment Group Limited in default, one year after its directors were jailed for defrauding 200 mostly elderly and vulnerable clients.
Vantage Investment Group was an investment manager owned by brothers Alan and Russell Taylor, alongside their advice company called Taylor & Taylor Associates Ltd.
Between 2008 and 2015 the brothers fraudulently produced client records and misrepresented documents, persuading clients to sign them in order to gain access to their pension funds.
The money was then transferred to Vantage Investment Group Ltd and placed in a high-risk finance scheme, without the clients' knowledge.
The FSCS told FTAdviser it had received 229 claims against the brother's advice arm Taylor & Taylor Associates, totalling £5.5m.
The claims related to investment bonds, investment portfolios, mortgage advice, pensions advice, self-invested personal pensions (Sipps), pension income drawdowns and regulated and unregulated collective investment schemes.
The compensation scheme has also so far received 26 claims valuing £630,000 against Vantage Investment Group, relating to high income bonds, investment bonds, investment portfolios and Sipps.
Victims of the Taylor brothers lost almost £17m, with Mike Broomfield, head of intelligence at The Pensions Regulator, describing the pair at the time of their sentencing as "textbook examples of how fraudsters abuse the trust of their vulnerable victims".
The FSCS declares a company in default when satisfied it is unable to pay claims for compensation made against it, allowing consumers to take their claims to the compensation scheme instead.
In April the lifeboat fund announced a levy of £532m for this financial year, an increase of £16m on its original forecast earlier in the year amid an "uplift" in the number of claims expected against Sipp operators.
Despite this, the final levy to be shouldered by life distribution, pensions and investment intermediaries decreased from the £175m predicted in January's plan and budget to £153m, at a saving of £22m.
Alan Lakey, director at Highclere Financial, said: "This is yet another instance where the good guys pay for the sins of the bad guys. These continual calls on the FSCS mount up creating further financial misery for advisers."
Mr Lakey said the FSCS levy constitutes 60 per cent of his FCA annual membership bill, which he said is subject to additional levies "as and when more restitution is paid".
He said: "£17m of potential compensation represents close to 25 per cent of the 2018/19 retail pool levy, which suggests a £750 emergency levy on my firm and far higher amounts on other larger enterprises."
Mr Lakey added: "Nobody in the industry would deny consumers the right to compensation where theft, bad advice or maladministration has caused a financial loss, but this open chequebook policy has to end.
"We keep hearing about treating customers fairly and as a customer of the FCA I want similar consideration."
rachel.addison@ft.com
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