There has been a sharp increase in enquiries from clients who have been mis-sold investments into unregulated scheme InvestUS, according to solicitors Anthony Philip James & Co (APJ).
APJ now represents 210 clients, double the number who were engaged in June, who the solicitor said could be due millions in compensation following the scheme’s failure.
The unregulated scheme purchased repossessed properties in Detroit, Florida and Chicago following foreclosures after the financial crisis. The properties were then renovated, let and sold on, with investors promised returns of 15% per year over three years.
The largest loss reported by an individual client so far is £80,000, although many have lost significantly more after also investing in other failed schemes including Ethical Forestry and Global Plantations, APJ said.
Unregulated introducer Avacade, which is now the subject of a criminal investigation by the Serious Fraud Office, and is facing legal action from the Financial Conduct Authority, enlisted now-liquidated adviser Shah Wealth Management to carry out risk reports on the suitability of the investments on a one-off basis.
More SIPP claims to come
AJP solicitor Glyn Taylor said if the clients had known the high-risk, non-standard nature of InvestUS, they would not have invested in the scheme.
“Due to the involvement of the regulated party, which has now been liquidated, we can seek redress for these clients from the Financial Services Compensation Scheme (FSCS) and we’re confident we will be able to secure fair compensation for their losses,” he said.
“However, many of the clients who have now come to us also invested into other schemes as part of the self-invested personal pension (SIPP) schemes.
“These schemes have also failed and, as there wasn’t an adviser involved, clients can’t seek compensation from the FSCS. To ensure clients get full compensation for all their losses, we will also be litigating against their SIPP providers to secure compensation for these additional investments.”
The Financial Ombudsman Service upheld a SIPP mis-selling complaint made by APJ that related to a high-risk investment within a Guinness Mahon pension.
APJ also issued more than 30 claims to the courts against Liberty SIPP in May, though yesterday the SIPP firm told Professional Adviser it had not received any notice of legal action from the solicitor.