20Twenty is a UK-regulated wealth manager which specialises in looking after expatriates in Spain and Gibraltar. Officials were not immediately available for comment.
In the ruling, the FOS found that the advice given by 20Twenty to the five investors, whose names and locations were not given, was unsuitable, and that they had not been informed of the potential risks involved in investing in Crossover Film Partnerships, a film production company.
Because the case was brought before January 2012 – when the maximum amount the FOS is able to legally ensure clients receive was increased to £150,000 from £100,000 – the five investors stand to receive just £100,000 each immediately. However, in such cases, a spokesman for the FOS said, the service recommends a business pay the full amount it has ruled the clients are entitled to receive.
While some may see the case as precedent-setting, the FOS spokesman stressed that its adjudicators look at each case “on an individual basis” to determine whether a recommended investment was suitable for the client in question, and his or her preferred risk level.
The service has seen an increase in complaints of this nature generally, he added.
While the FOS ruling is a blow for Totus, the FOS spokesman noted that it shows the advantages of ensuring that one’s adviser is regulated, whether by the UK’s Financial Conduct Authority or the local equivalent, in the event things go wrong.
If these clients had been living in Spain but the advisory company – like 20Twenty – had been FSA (now FCA) regulated, and its representative office in Spain was as well, “we would consider their case” if they applied to the FOS in search of compensation, he said.
The five investors were represented in their dispute with 20Twenty by Rebus Investment Solutions, a UK-based claims management firm that handles such cases of alleged mis-selling of investment and tax-avoidance schemes.
In a statement, Rebus said its five clients had been advised to invest in Crossover Film Partnerships, promoted by Crossover Capital, "but the advisers misrepresented the scheme by failing to make the investors sufficiently aware of the high level of risk inherent in the scheme, especially since the loans were full recourse to the investor".
It noted that the Crossover investment had been a particularly unwise choice because it was geared, so that the investors were at risk of losing as much as three times their initial contribution.
Rebus said it intended to help its five clients to recover the remaining amount of the award specified by the FOS "through the courts.”
Crossover is described as being known for a 2006 film called Provoked.
