IFA faces £300k court battle over collapsed property investment

On 19 July 2010 Greenfield went into administration, no shares were returned and their value was zero

So what's the point? Don't get it.

Greenfield was the ambiguous property fund. I mean ambiguous in the sense that the status of its investors as shareholders or creditors was never clear...They purported to issue share certificates but in fact were simply booking client money as debt on the books.

Suffice to say, the FSA became aware of this and decided to investigate whether or not Greenfield was one of those dreaded Unregulated Collective Investment Schemes....

After giving this their usual tick-box/marker-pen treatment, they realised (so they thought) that it wasn't - it was a private closed-ended company issuing shares to individuals. So that's allright then. As long as its not a dreaded UCIS thing, hey? Afterall, UCIS = High Risk according to FSA. Why look below the bonnet at the investment fundamentals when you can approach these things simplistically?

Unfortunately, this inept mantra (UCIS = Bad; Other stuff = Good) badly let down the investors. It seems that there was a mixture of poor accounting and excess leverage (and poor property selection!). Plus of course there was dubious advice from the 'associated' adviser company in getting little old ladies to invest their life savings into it....But as long as it wasn't a UCIS, hey?

So the thing went belly-up and people lost money. Well done FSA. Another regulatory failure to add to the list?

Presumably a claim against insurers if the firm is liquidated. So the story is "Client claims against IFA - insurers dealing". Hardly news!!

@Nick

She invested £1.3M and received back £137k from a sale of £530k of the investment. £1.3M minus £530k realised leaves £770k of the original investment which is now worth zero.

No point, just mathematics.

She appears to be suing the advisory firm - and if there are a significant level as assets in it still, as a creditor, she might get more than if she went to either FOS or the FCSC - and 'won', she would only get £100K or 50K (assuming its a Regulated Product etc) respecitvely.

There seems to be a never-ending parade of cases such as this. What never ceases to surprise me is this 1.A very sizeable sum ( £1.3 million in this case ) in one single investment - where's the spread of risk ? 2. An adviser again going for high risk contrary to the client's wishes. 3. Why don't clients question adviser recommendations ? Or am I being too simplistic. Wishful thinking ?

Yes but we all get tarred with the same brush!

Roy- the article doesn't say how much she acually had so we don't really know whether this represented a sizeable investment in one asset.

She says "excessive" but if you'd lost virtually £1.3m it might seem excessive, even if you had £100m!

Re Mr Rutter's point (3), it appears from the article that there was discretionary investment going on, so the ability to challenge (esp. up front) would presumably have been quite limited.

No-one moaning about the lack of a long-stop yet? Seems this time that omission might work to the benefit of the adviser community...

I'd imagine that the adviser was appointed as an investment adviser and could place deals on the clients behalf (but advisory so they should be checking with the client first). Re the lack of the long stop, thats irrelevant in this case isn't it as this is a limited company that has gone into liquidation. It is the ltd company that holds the liability not the individual, so presumably any complaints about the advice that are uphelp via FOS would the fall upon the FSCS.

But Mrs D's claim in with the liquidator is only for ten grand? What's the basis for this action?

I don't get it either, why so much in one fund? It's so basic, did this 'IFA' miss the chapter on diversification way back in CF2?......We have a risk profile questionairre on every file, and a record of discussion of attitude to risk in the SL, just how do these people get away with being so ill educated and non-compliant for so long? Mystified.

Arr ...... Mr Hexley!!

How is this so called Adviser still authorised to give advice.....iCAP Investment Management and Intelligent Financial Advice Limited! You surely have to look at the conflict of interest that existed between the Adviser and Mr Hexley who supposedly ran the single property fund!!!

Not to mention the rather large backhander paid to messrs Sneath and Pratt by Hexley to seed the fund. Clients were not interested so they conned Mrs Dear and a few others into the transaction using a Royal Skandia offshore bond. They even had the cheek to rename the fund on valuations to the Royal Skandia International Property fund to avoid alerting Mrs Dear to the situation. A trio of conmen!!