About a month ago the Financial Services Compensation Scheme declared Independent Portfolio Managers in default, shortly after its liquidation.
The FSCS is now inviting claims from investors in Secured Energy Bonds and Providence Bonds.
There are potentially 2,000 UK customers that may be affected by the failure of IPM but the value of potential claims is still unknown. Many customers invested into one of two failed mini bonds which IPM had approved. We are aware that many former customers of IPM have outstanding complaints with the firm / Financial Ombudsman Service (FOS) prior to it failing.
I am not 100% clear on whether this means the FSCS will cover investors’ losses in full. The Financial Ombudsman certainly instructed IPM to cover investors’ losses in full (an empty order as IPM didn’t have any money) but whether the FSCS will pay out on the same basis has not been confirmed for certain. The phrase “the value of potential claims is still unknown” seems to leave this deliberately ambiguous.
It will probably become clear when claims have been processed and the FSCS has disclosed how much they have paid out.
While it would be great if investors recovered their losses in full, I stand by my earlier opinion that this is an absurd position. The FSCS was never designed to cover losses in unregulated investments. And if the FSCS pays out over IPM’s misleading literature, effectively this means that any unregulated investment can be covered by the FSCS if they find or create an obscure outfit with FCA authorisation to approve the literature – something that any outfit that has secured FCA-authorised status can do.
As we’ve seen with the adviser phoenixing scandal and numerous other dodgy entities which were given FCA authorisation, the FCA will authorise literally anybody.
Where does this end?