Meanwhile at the Financial Services Compensation Scheme…
Financial advisers could be on the hook for hundreds of millions of pounds after the latest twist in the Harlequin saga in which the Financial Services Compensation Scheme (FSCS) has written down the value of the investment to nil.
In a document from the FSCS seen by Professional Adviser, dated 12 February and marked ‘compensation calculation’, the body lists the value of a Harlequin Property investment as £0.00.
A FSCS spokesperson confirmed the decision.
“Where applicable we will disregard the residual value in respect of Harlequin investments,” they said.
The move opens the floodgates for the FSCS to pay the thousands of Harlequin investors compensation on the full amount they put into the unregulated scheme, up to a £50,000 limit.
With around £400m originally invested in Harlequin, the compensation bill is set to run into hundreds of millions of pounds, putting it on a par with other investment disasters like Keydata and Arch cru.
As in those cases, the bulk of the cost of the compensation is likely to be borne by investment advisers.
Read the entire article: Spectre of £400m compensation bill looms as FSCS values Harlequin at nil