Timothy Hughes and Andrew Rees, directors of 1 Stop Financial Services, were banned by the Financial Conduct Authority (FCA) in 2014 for advising nearly 2,000 customers to switch their pensions into risky, unsuitable SIPPs.
These investments were valued at £112 million and were made into overseas properties and diamonds schemes. One of these investments was into a company called Harlequin Property.
Harlequin Property
Harlequin Property was sold to investors as the chance to own a share in luxurious 5-star properties. In return, they would receive an annual rental income of at least 10% or more. It was also claimed that the properties would enjoy 90% occupancy rates.
Failure of Harlequin Property
Instead of the 6,000 properties that were promised, only 300 were constructed. One of their flagship resorts, which opened in 2013, was the Buccamant Bay resort. Whilst famous football and tennis players were used to promote the resort and to build trust, this resort later went into financial administration leaving £200 million unaccounted for.
FCA investigation
In a later investigation, the FCA found that both directors of 1 Stop Financial Services had failed to assess the suitability of their clients with regards to high-risk investments. They also failed to establish their customers’ level of financial knowledge about the products they were buying.
The FCA described 1 Stop’s model as “deficient.” The FCA also noted that 1 Stop’s customers should have been provided with information that was clear and easy to understand. Instead, they were provided with suitability reports full of technical information that were 37 pages in length.
There was also a conflict of interest given that both 1 Stop’s Directors were also directors and shareholders of an introducer firm, EGI. This firm introduced almost a quarter of 1 Stop’s customers between 2010-2012. Hughes and Rees were banned from performing any significant influence function in relation to any regulated activity. They also agreed to pay £490,100 to the FSCS.
Lost money as a result of 1 Stop Financial Services?
Did 1 Stop Financial Services act as administrator for your SIPP? If so get in touch. Our team of financial mis-selling experts may be able to recover compensation for any loss suffered.