Advisers will be in the firing line as the Financial Services Compensation Scheme begins considering claims against IFAs who told clients to invest directly in property scheme Harlequin.
Harlequin marketed and built overseas luxury property and has come under investigation by the Serious Fraud Office after some developments never materialised and high commissions came under fire. Investments were commonly made from pensioners through Sipps.
While the FSCS has said negligent mortgage advice and advice to pension switch into underlying Harlequin resorts was already receiving payouts, the lifeboat fund had decided that direct investment advice should now also fall in scope.
A statement on the FSCS’ website reads: “More people may now have a claim for bad investment advice in relation to Harlequin investments, following a review by FSCS.
“FSCS is now widening the net to include claims for negligent advice to invest directly in Harlequin after new evidence obtained through its recoveries action shows the products are likely to be unregulated collective investment schemes.
“This paves the way for more people who may have been mis-sold a Harlequin product by their financial adviser to make a claim for compensation.”
Money Marketing has previously reported on a number of FSCS decisions that have awarded compensation over bad advice surrounding Harlequin, where the Financial Ombudsman Service had previously rejected the complaint.