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Court ruling against exotic investments

Exotic investment schemes will now find it harder to avoid regulation by the FCA, after the Court of Appeal ruled in the regulator’s favour.

The ruling means that collective investment schemes in assets such as property, wine, and other unquoted investments, may come under more scrutiny from the regulator.

The FCA won a case against Capital Alternatives and other collective investment schemes, which it claimed were promoted and operated without FCA approval.

The operators of the funds said the structure of their schemes meant they did not qualify as collective investment schemes, as each individual’s holding was run separately, and so came outside the FCA’s remit.

The defendants appealed the High Court decision, but the Court of Appeal has ruled in the FCA’s favour.

“Collective investment schemes are complicated and investors put their money into the operator’s hands with no real control over what happens to their money,” said Tracey McDermott, the FCA’s director of enforcement and financial crime, after the High Court ruling in February.

“This ruling shows that even if operators have deliberately tried to structure their scheme to avoid regulation, the court will still look at whether those operating the scheme should in fact be regulated for consumer protection.”

The FCA case also focused on African Land, also called Agri Capital, which offered investments in rice farm harvests in Sierra Leone, and Reforestation Projects, also known as Capital Carbon Credits, which offered carbon credits generated from lan in Sierra Leone, Brazil and Australia. The FCA hopes it will now be able to get compensation for investors in the failed schemes.

In recent years many people have invested in such high risk unregulated schemes and lost millions of pounds. These high risk, complex investments even though only suitable for very experienced investors were sold to members of the public who had no real investment experience. They were never informed of the risks and the potential to lose their money, only that the investment would generate good returns.


If you have lost out by investing in things like:

Or any other unusual investment product TLW’s financial mis-selling team may be able to get your money back. This applies even if the firm who advised you has now gone out of business.