Whilst many people make financial investments with the aim of building up a nest egg for the future, it can be a treacherous landscape even for financial experts. Never more so than when dealing with unregulated investments, which do not offer a security net if they fail.

However, depending on the circumstances of the investment, there may still be some recompense if this should happen.

What is an unregulated investment?

Usually, if you seek the advice of an Independent Financial Advisor (IFA), they will provide you with options of regulated investments to put your money into. This means the investments are regulated by the Financial Conduct Authority (FCA) and are covered by the Financial Services Compensation Scheme (FSCS), so if something drastic happens to your money, such as liquidation of the investment vehicle, you are protected and should get your investment back.

Unregulated investments, on the other hand, do not offer this security. Whilst not all unregulated investments are scams, they tend to promise ‘guaranteed high returns’ over a significantly shorter timeframe than traditional investments – a typical ‘too good to be true’ scenario. These investments take many forms, including property and land developments such as car parking spaces, burial plots and plantations, or shipping containers and cryptocurrency.

Inadequate investment advice

What your options are if an unregulated investment fails, will depend entirely on the circumstances and, in some incidents, you may have grounds for a claim. An important detail will be whether you were advised on the investment and if you were made aware that it was unregulated.

A regulated financial advisor should only offer investment options that suit the client they are advising, particularly in relation to the level of risk they are comfortable with and able to afford. If an investor puts their money into a product that is not suited to their financial circumstances or investment experience based on misleading or careless advice, it may be possible to claim compensation on the basis of mis-selling.

To establish whether you may have been mis-sold, questions to ask yourself include whether the product you invested in was fully explained to you, including all the risks involved and any fees or penalties that may be incurred.

Did your advisor discuss with you the level of risk you were prepared to take and what you were planning to use the returns for? And were you given alternative investment options, or made to feel under pressure to invest?

Unregulated pension investments

Since a legislative change in 2015, people have been able to access their personal pensions from the age of 55 which has reignited the pensions investment market. Inevitably, there are a disheartening number of cases of people losing their hard-earned pension pots through ill-advised investment decisions, including into unregulated products. For example, Occupational Pension Schemes (OPS) are occasionally set up by an unregulated authority.

The pensions market in particular is extremely complicated, and it can be difficult to work out if there are grounds for a claim and where to begin. However, for any investment that has been mis-sold there may protection, even if it is unregulated. For example, Small Self-Administered Scheme pensions (SSAS) are generally set up by non-regulated operators and are high risk, but if you have been transferred to one by a regulated IFA there may be grounds for a claim.

Financial litigation

Putting money into unregulated investments that are higher risk can form part of an experienced investor’s wider strategy, but only if the level of risk is appropriate to the type of investor. For most, they should be treated with extreme caution or avoided entirely.

Nonetheless, thousands of investors have lost crucial savings due to inadequate advice and may have grounds for a claim, even in the case of unregulated investments.

Through expert knowledge, our experienced financial litigators at RHL Solicitors can help you assess whether you have a claim and the likelihood of success, as well as improve your chances of a favourable outcome.

If you think you have a claim, contact our friendly team. Once we have discussed your circumstances with you, we operate under a ‘no-win, no fee’ basis so that you can rest assured that there are no up-front or hidden costs for our services and no financial risk to you if your claim is unsuccessful.

The team at RHL Solicitors are committed to making your claim process as simple and stress-free as possible.