The Financial Services Compensation Scheme is set to reopen cases brought against advisers in relation to investments in an offshore property scheme.
The FSCS has this month said it will start changing how it calculates losses for those who invested into The Resort Group, an offshore luxury property scheme.
The lifeboat fund has stated it has a list of claimants who had initially received compensation from the FSCS below the £85,000 cap. It is now writing to these claimants to pay any additional compensation where necessary.
The claims in question related to The Resort Group’s overseas assets and were initially brought against 19 failed financial advice firms. The FSCS paid out £5.9m to investors in compensation earlier this month. At the time, the FSCS stated:
The TRG investments relate to holiday resorts that have been built and are largely operational, with the investment manager still providing valuations.
As with investments of this nature, we continue to monitor the situation closely; and following updated reviews of the issues with the different types of investment in TRG, [we] allowed customers with full ownership of units to utilise independent valuations and customers with fractional memberships to utilise nil value for the purposes of compensation calculation.
Now, it would seem the FSCS has indeed monitored the situation and changed their approach slightly. They have this week stated:
We have a list of all customers who have received interim payments, that are less than the maximum FSCS compensation limit, and we will re-open these claims and pay any additional compensation due to those customers.
For customers with full ownership of units, FSCS can accept independent valuations from a certified company; although these will be sense-checked against the value of similar properties on an online property listing website.
What is the FSCS?
The FSCS is a statutory deposit insurance and investor compensation scheme. It can compensate clients if a financial firm is unable to. It has often been described as a “lifeboat” fund.
It is independent of the government and the financial industry, and was set up under the Financial Services and Markets Act 2000, becoming operational on 1 December 2001. They do not charge individual consumers for using our service.
Smooth Commercial Law have an extensive working knowledge of the FSCS and the process to achieve a successful outcome having submitted a significant numbers of claims. The FSCS have protected more than 4.5m people and paid out £26bn in compensation.
The scheme pays a maximum of £85,000 on individual investment claims. This was increased from £50,000 on 1st April 2019.
Who are The Resort Group?
The Resort Group was founded in 2007 by CEO, Rob Jarrett, a former banker and financial consultant at Prudential. It owns four luxury resorts in Tortuga, Dunas Beach, Llana and White Sands. It offers overseas property investments for these resorts, with investors owning hotel rooms or a fraction of the room.
2007, however, was a relatively unfortunate time to set up a company of this nature, with the crash of the financial markets in 2008. To keep investment money coming in, The Resort Group set up a convoluted system of organisations which seemed to point towards investing into their company. This included a call centre called Lifetime Connections and a pension review company called First Review Pension Services, which were both heavily linked to The Resort Group.
A 2008 marketing brochure for The Resort Group, issued by an independent partner Kayden Estates, spoke about 20 per cent annual returns on the apartments.
Many people were convinced to invest their personal pension fund into the scheme.
The company hit national headlines in 2016 after a BBC Panorama programme uncovered evidence of unregulated financial advisors giving pension advice which included a guarantee of a 10 per cent interest after a year of investment into the Cape Verde scheme.
The sales were very often bound to pension transfers or remortgages. Many of the advisers who sold them have since gone out of business.
Do I have a mis-selling claim against The Resort Group?
If you invested into The Resort Group and were not told about the high-risk nature, then you may have been mis-sold your investment, like hundreds of others.
Multiple financial advisers and the Financial Services Compensation Scheme (FSCS) have been paying out compensation to those who have been mis-sold the investment through investing via their SIPP.
This includes those who have:
- Transferred their pension to a SIPP
- Invested into The Resort Group
- Are not earning over £100k per year
- Not much investment experience
- Claimed to have been pushed into investing after heavy sales tactics
The Resort Group and their financial advisors who worked for them failed to carry out proper checks on the suitability of their investors. This has left many investors losing thousands of their savings. Does this sound like you?
How can Smooth Commercial Law help?
Have you been mis-sold a pension or investment product by The Resort Group? Smooth Commercial Law may be able to help you claim compensation.
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent, fraudulent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.