Manx funds caught up in planned class action

by DOUGLAS SHEPHERD

A multi-million pound legal claim against companies who allegedly assisted the mis-selling of failed investments - including the Isle of Man fund chosen by Scottish Borders councillors to bankroll a large waste treatment facility - is being assembled by agents and lawyers in Australia and the United Kingdom.

The so-called class action is likely to be lodged in the High Court in London on behalf of hundreds of victims who in some cases have lost their life savings. Many of those hit by the failure of the funds are resident overseas and a sizeable proportion are understood to be pensioners.

Among the ten investment funds listed by those promoting the action are the New Earth Recycling & Renewables [Infrastructure] fund (NERR), now in liquidation, and the Eco-Resources Fund, also in the hands of liquidators. Both of those entities were managed and promoted by Premier Group (Isle of Man) Ltd., yet another Manx-based insolvent business.

It was the NERR fund which was meant to provide the finance for a "cutting edge" waste management centre to serve the Scottish Borders at a cost of £23 million. But despite costly (£2.4 million) efforts by the council and its New Earth partners from 2011 and 2015 to deliver the plant on a site at Galashiels not a single brick was laid before the entire venture was abandoned in disarray.

However, the planned class action will not be aimed at the failed funds. Instead the claim is set to be laid against insurance companies Old Mutual Investment Management Limited, Old Mutual Plc, Friends Provident International Limited and Friends Life Limited.

According to Australian based Coburn Corporate Intelligence (CCI) Ltd: " The insurance companies hosted funds on their platforms which failed.  It is alleged that people who invested in Portfolio Bonds, which were linked to those funds on the insurance companies’ platforms, are entitled to compensation.The losses suffered could collectively be in excess of half a billion pounds."

CCI go on to explain: "Solicitors, Signature Litigation LLP (London), and Queen’s Counsel in London are reviewing the facts and preparing a draft Particulars of Claim.

"CCI are currently looking to finalise funding arrangements and have a number of interested funders considering the case. The intended claim is for more than £100 million.

"We are gathering information from further potential claimants to assess whether or not they may be eligible to participate in the claim and recover compensation. The CCI class action is overseen by a six-member Advisory Committee, comprising of investors and independent members."

The insurers are expected to be 'accused' in the action of  mis-selling so called Unregulated Collective Investment Schemes (UCIS) to clients living in jurisdictions including Thailand, Indonesia, Cyprus and the UAE, via the Isle of Man.

UCIS such as the NERR fund are not supposed to be available to regular investors in the UK due to their risk and the fact that they are not supervised by the regulator, the Financial Conduct Authority (FCA).

 A significant number of investors in the New Earth fund have already made successful complaints to the Financial Ombudsman Service which has ordered a number of financial advisers to pay tens of thousands of pounds in compensation for giving unsuitable advice.

Both Old Mutual and Friends Provident have told the magazine City.com they completely refute the allegations levelled at them. They have denied wrongdoing and or liability.