Financial Services Compensation Scheme  

FSCS opens door to claims against alleged Ponzi scheme

FSCS opens door to claims against alleged Ponzi scheme

The Financial Services Compensation Scheme is now accepting claims against an advice firm which ran an alleged illegal Ponzi scheme, and has warned many victims may not know they may be entitled to compensation.

In an update today (February 26) the life-boat body said it was concerned most clients of former Aberdeen-based Midas Financial Solutions (Scotland) Ltd were unaware they could register a claim for money. It said it had yet to receive any claims relating to Midas.

The FSCS confirmed it was investigating the activities of Midas and advice given to clients to invest in "high interest short term deposit accounts".

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According to the compensation scheme, Midas pitched the investments as offering attractive returns on "favourable terms" due to the owner's relationship with a high-street bank. 

But the FSCS has alleged that in reality the funds were placed in a so-called "Ponzi scheme" operated by the advice firm's owner. 

Last year 95 clients of Midas, which was operating as an appointed representative, lost a case against its network brought in a bid to reclaim funds lost in the alleged £12.8m scheme.

The Court of Appeal sided with the Sense Network, and agreed with a previous ruling that found it was not responsible for the losses experienced by the claimants because the advice given by the appointed representative sat outside of its AR agreement.

The court found because the investment scheme being run by the appointed representative, regardless of its legality, was not on the network's panel of approved providers, the network did not have any liability for the losses that occurred. 

According to the Aberdeen Evening Express and the BBC, Midas owner Alistair Greig, 66, last week went on trial accused of fraud at the High Court in Edinburgh, where he denied the allegations. The trial continues.

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