I hadn't realised that the FSA had busted the David Aaron Partnership. They were a high profile firm which the media regularly used for comment and advice. It just goes to show how easy it is for crap firms to use the media to gain profile and business.
Story from BBC NEWS:
David Aaron investors given hope
Financial advisers David M Aaron and David Aaron Partnership are now "in default", the Financial Services Compensation Scheme (FSCS) has said.
This paves the way for investors who believe they were mis-sold investments to seek compensation from the FSCS.
The two firms collapsed last year after they failed to meet liabilities arising from bond mis-selling claims.
Some investors lost almost two-thirds of their investments in so-called "precipice" bonds.
Precipice bonds offered the prospect of a high rate of return.
The investment is linked to an index, such as the FTSE 100, and if this underlying index falls below a certain level, investors could end up losing most or all of their capital. They were however marketed and sold to investors as a low-risk investment.
Compensation time
Now that the value of the pension and endowment mis-selling claims exceeds the assets of the company, the company has been declared to be in default by the FSCS.
There is light at the end of the tunnel Loretta Minghella, FSCS chief executive
Individual firms normally compensate people for successful mis-selling claims.
But if an authorised investment firm, regulated by the Financial Services Authority (FSA), ceases trading, the FSCS picks up the bill, using money collected through a levy on firms.
"This is a large, complex default and we recognise that investors have been worried about what is happening," says Loretta Minghella, chief executive of FSCS.
"However, we can now consider claims against both firms, so there is light at the end of the tunnel."
The scheme pays 100% of the first £30,000 lost and 90% of the next £20,000, up to a maximum of £48,000 per investor.
Investor claims to the FSCS rocketed by 400% last year to 3,342 from just 840 in the previous year. The average award was £3,700.
Investors who think they have a claim against the firm, are advised to contact the FSCS.