Trio Banned & Fined Over Pension Funds Mistreatment

SVS went into administration in 2019, following a block by the City watchdog, the Financial Conduct Authority (FCA), on it doing any new business. The block came on the back of an FCA investigation which uncovered extensive conduct issues within SVS, including undertaking insufficient due diligence, operating questionable commission arrangements, and promoting high-risk investments. The company had invested £69.1 million of its clients’ pensions in high-risk bonds that have since defaulted, leaving investors out of pocket.

Kulvir Virk, Demetrios Hadjigeorgiou, and David Stephen held senior roles at SVS. As an investment firm authorised by the FCA, SVS was obliged to act in its customers’ best interests when investing money on their behalf. During its investigations, the FCA found that, contrary to their duties, those in charge of SVS prioritised company profits over protecting clients’ money.

Mr Virk was found to have acted recklessly in his role as CEO, causing SVS to implement a complicated business model that maximised the flow of client monies into high-risk, illiquid bonds, on which SVS received commissions of up to 12% of customers’ investments. Illiquid bonds are those that can’t be sold without a substantial loss in value because, for example, there is a lack of willing purchasers.

The FCA found that Mr Hadjigeorgiou had failed in his duties to ensure the firm carried out proper due diligence and managed conflicts of interest. For his part, Mr Stephens had failed in his role as Head of Compliance to ensure SVS was following the strict rules laid down by the FCA.

As a result of their findings, the FCA banned Mr Virk from working in financial services, and Mr Hadjigeorgiou and Mr Stephens from holding roles in senior management. In addition, the FCA imposed a fine of £215,500 on Mr Virk, £84,600 on Mr Hadjigeorgiou, and £52,100 on Mr Stephen.

Mr Hadjigeorgiou and Mr Stephens dispute the findings and have lodged an appeal.

Following SVS’ collapse, customers were unable to access their money for some time. However, as of July 2020, most could do so through an online portal established by ITI Capital, the broker to whom SVS’ customers’ funds were transferred. The cost of administering this transfer was met by the Financial Services Compensation Scheme (FSCS) who had been investigating SVS since the company’s collapse in 2019. This meant client money could be transferred ‘whole’, with any deduction of fees. Unfortunately for many SVS clients, the value of their investments and assets had already fallen, due to the actions of the firm, opening the door for compensation claims.

SVS customers who have lost money can submit a claim to the Financial Services Compensation Scheme (FSCS), the statutory lifeboat body set up to compensate customers who have lost money when FCA regulated businesses fail.

Many people have submitted claims over the past 4 years, with the FSCS accepting claims in relation to bonds, Self-Invested Personal Pensions (the SVS SIPP was administered by Gaudi Regulated Services), Contracts for Difference and Discretionary Fund Management. The FSCS started issuing claims decisions in the SVS matter in June 2024 but has urged customers to be patient since the high volume of claims received makes delays inevitable.

Sarah Spruce, Legal Director at TLW Solicitors, said of the recent developments:

“Customers of SVS Securities have been waiting almost five years to get answers about their financial losses. Thankfully, the FSCS has completed its investigation and begun paying out against claims.

“Not knowing if you will ever see their hard-earned money again is extremely stressful and upsetting. Our specialist financial mis-selling team has extensive experience of dealing with the FSCS’ claims and appeals processes, ensuring that our clients receive the compensation they are rightfully owed and helping them put their financial plans back on track.

“Get in touch for a no obligation discussion and to see if you may be eligible to make a ‘no-win, no-fee’ refund claim.”

If you or a loved one have lost money with SVS, or through any other type of investment mis-selling, you may be entitled to compensation.

Investment mis-selling generally happens when a customer is left out-of-pocket after investing in a financial product following negligent advice from an FCA-regulated financial adviser. Of course, any form of investment comes with an element of risk, however, your financial adviser is duty-bound to carry out due diligence on a proposed investment to make sure that it is sound and aligns with the level of risk you are happy to take with your money and is suitable for your needs and circumstances. If your financial adviser breached their duties and you lost money as a result, then you may be eligible for compensation.

At TLW Solicitors, we are dedicated to helping clients who have lost money due to investment mis-selling, as happened with SVS. Our FSCS claims specialists offer an initial, no-obligation consultation to assess your case and advise on the merits of your case. We can help you understand your rights and navigate the process, ensuring your claim is dealt with as quickly as possible and that you receive the compensation you are owed.