FSCS Accepting Claims from Gaudi Investors

One such decision involved an investor, Mr C, who claimed Gaudi failed to carry out appropriate checks when he applied for a SIPP and invested in Affinity Global Developments bonds. The bonds were offered on a 5-year term, paying 8% to 12% returns. Mr C was introduced to Gaudi by Dante Partners who, it transpired, was engaged by the St Lucia property developer, Affinity Global Developments, to promote its bonds.

Gaudi asked Mr C to open a share dealing account with a company called Beaufort Securities and to have an agent, Mr H, give instructions in relation to the account. At the time, Mr H was a director of Affinity Global Developments and he instructed Beaufort to make the investment into the Affinity Global Developments bonds. Mr C had also been advised by Mr L, a financial adviser no longer authorised by the FCA, to give investment advice.

Mr C transferred his existing personal pension, totalling almost £700,000, into the Gaudi SIPP in 2015 and his money was used by Beaufort Securities to invest exclusively in Affinity Global Developments bonds. Five years later, Affinity Global Developments entered liquidation and Mr C lost all his money.

An investigation by FOS concluded that Mr C’s complaint against Gaudi should be upheld. Gaudi should never have allowed Mr C to invest his whole pension pot in one, high-risk fund without proper financial advice. The connection between Dante, Beaufort and Mr H should have rung alarm bells, making Gaudi realise the investment was likely to be a scam and preventing the transactions from going ahead. Gaudi was ordered to compensate Mr C to the position he would be in had he not transferred from his existing pension in the first place.

As a result of this and other failings identified by FOS, Gaudi faced a large compensation bill, which it would be unable to pay. Gaudi was declared insolvent, and the firm’s board decided to place the company in administration.

Gaudi’s pension business has been sold to Platform One and investors will be contacted by them concerning next steps.

Gaudi also operated Self-Invested Personal Pension (SIPP) schemes for other firms – these businesses have not been affected by Gaudi going into administration, so investors can continue to use their SIPP as before.

The Financial Services Compensation Scheme (FSCS) is now accepting claims against Gaudi. The FSCS is able to award compensation to customers of FCA-authorised firms that have gone out of business or failed. An FSCS update advises that there needs to be a complex investigation into the business partners who used Gaudi SIPPs, with each being considered individually – and this could take some time.

Peter McKenna, Partner at TLW Solicitors said of the recent developments:

“If you have already started a claim against Gaudi with the Financial Ombudsman Service (FOS), you don’t need to do anything more at this stage. New claims should be submitted to the FSCS. Remember that, in order to make a claim, you must show that you were mis-sold a pension investment.

This could have been, for example, as a result of the risks not being suitably explained to you, the promised return on investment never materialising, or being pressured into making an investment decision. Gaudi also had to carry out sufficient due diligence to ensure that the investment was right for your circumstances and that you were not likely to suffer financial harm.

If you are concerned, please get in touch with a member of the TLW team for a no-obligation discussion to explore your options.”