Investors are facing heavy losses following an adviser firm liquidation due to its professional indemnity insurance exemptions for unregulated collective investment schemes.
20Twenty Independent went into liquidation on October 25 after losing a £2.6m Financial Ombudsman Service case over film partnerships in March.
FCA rules do not require advisers to inform clients of PI exclusions but the regulator has previously raised concerns and is investigating better disclosure rules.
In March the FOS criticised 20Twenty for giving unsuitable advice on £2.6m invested in Crossover Film Partnerships.
On claims brought before 1 January 2012, the FOS’ maximum award limit is £100,000 per person, and £150,000 for claims brought after this date.
Nine more clients are claiming a total of £2.5m after advice to invest Crossover and another film partnership scheme Icebreaker.
20Twenty is yet to be declared in default by the Financial Services Compensation Scheme, which pays out a maximum of £50,000 on investment claims.
Claimants are seeking payouts from 20Twenty’s PI policy but a creditors report, seen by Money Marketing, suggests exemptions for Ucis and film partnership schemes apply after the policy was changed in October 2012.
Claims firm Rebus Investment Solutions, which is representing the clients, says the “alarm bells are ringing” for investors.
Rebus head of client relations Martin Taylor says: “It is not fair on the good IFAs either as they are left holding the baby with FSCS levies. Where this leaves our clients is questionable and other clients are starting to come out of the woodwork.”
Insovency administrator CMV Partners said it has received no proven claims.
Hudson Green & Associates principal Ian Hudson says: “If an adviser does not have PI cover for the area they are advising on then they should not be advising on it.”