Scammed Investors May Be Denied Millions In Compensation

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Thousands of pension savers and investors may miss out on compensation as the result of decisions from financial watchdogs.

The first bad news is the Financial Services Compensation Service (FSCS) has suspended a probe into provider Fast Pensions.

The company and five related firms were wound up in the High Court in May 2018 for offering more than 500 retirement savers risky pension investments involving fund transfers totalling £21 million.

The FSCS started accepting claims against advisers who recommended transfers into the scheme, but now says no further claims will be investigated as no evidence has been uncovered that shows the advisers knew how Fast Pensions was investing client cash.

Fast Pensions probe suspended

“We understand that a number of consumers received advice from both FCA authorised and unauthorised financial advisers to transfer their existing pension arrangements into one of 15 schemes linked to Fast Pensions,” says the FSCS web site

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“Some consumers received cold calls offering free pension reviews, while others were told that they could get a loan if they transferred their pension savings to one of the Fast Pensions’ schemes.

“In some cases pension monies were invested into high risk investments, some of which have become illiquid, which means they can’t currently be sold or traded.

“Unfortunately, we haven’t found any evidence to show that FCA-authorised or regulated firms were, or should have been, aware of Fast Pension’s actions regarding pension money. This means we can’t establish that these firms may owe customers a civil liability regarding transfers to Fast Pensions. The result is that we’re suspending our investigation.”

LCF minibond failure

In a second separate inquiry, the FSCS has also announced many of the 11,600 investors ploughing £237 million into minibonds offered by failed financial firm London & Capital Finance (LCF) may not be paid compensation.

“The FSCS will protect the 159 bondholders who switched from stocks and shares ISAs to LCF bonds,” says the FSCS web site

“FSCS is unable to protect the 283 bondholders who dealt with LCF before it was authorised to carry out financial services business. We will contact these customers to confirm this.

“While FSCS maintains that the act of issuing mini bonds is not a regulated activity, and is therefore not something we protect, we have concluded there will be some customers who were given misleading advice by LCF and so have valid claims for compensation.

“However, we expect that many customers will not be eligible for compensation on this basis. We will provide a further communication with details of when and how customers in this category can submit their claims. We will aim to start reviewing these advice claims in the first quarter of 2020.”

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