The Financial Ombudsman Service has upheld a claim against an IFA firm on behalf of five investors over the advice given on a film tax avoidance scheme.
The FOS ruled the advice given by 20Twenty Independent to invest in Crossover Film Partnerships was “unsuitable” and the scheme was “misrepresented” to investors.
The adjudicator ordered compensation to be paid for the initial investment minus income received and £500 for the distress of inappropriate advice, along with more specific costs incurred by the individuals such as loans.
The FOS ruling relates to one investor who lost £676,241 after the film he invested in did not generate enough money to pay for the liabilities incurred.
The ombudsman ordered a payment of £100,000 to be paid by 20Twenty plus interest and costs and recommended that the full amounts lost be compensated within 28 days.
The FOS has not released details about the other four investors involved in the complaint.
The ombudsman can only award redress of up to £150,000. It can advise firms to pay more but this is not binding.
If investors do not want to accept the ruling, they can pursue the firm in court instead.
However, there have been two contradictory high court rulings recently on whether complainants can accept a FOS award and pursue the firm in court for additional redress.
The matter is set to be decided in an upcoming appeal hearing.
Bloomsbury Financial Planning partner Jason Butler says: “It seems to be a case of people motivated by greed and advisers asleep on the job. There will be more of these cases because some products are so complex that the adviser does not even understand them. The advice must be reasonable and documentation spot on.”
20Twenty declined to comment on the case.