High‑Risk Fractional Investment Scams: The Case of Qualia

Qualia offered a fractional ownership model where investors purchased long-term leases on individual care home rooms and then sublet them to the care provider. This opportunity was marketed as a ‘hands-off’ investment, promising fixed income without any tenant management responsibilities.

However, these schemes are often unregulated, which exposes investors to significant financial risks. In this case, many investors were unaware that they were participating in a structure that could be classed as a ‘Collective Investment Scheme’.

A UCIS or Unregulated Collective Investment Scheme pools money from multiple investors to invest in significant property developments, car parking spaces, or storage units. UCISs are not authorised by the Financial Conduct Authority (FCA), the financial industry’s regulator and watchdog.

These schemes are illegal to promote to everyday retail investors and do not carry the same consumer protections as regulated products. If things went wrong, Qualia investors couldn’t therefore get help from either the Financial Ombudsman Service (FOS), which deals with disputes between regulated financial institutions and their customers, or the Financial Services Compensation Scheme (FSCS), a government backed lifeboat scheme that steps in if a regulated financial business fails.

The FCA and the Courts found the Qualia scheme operated like a Ponzi scheme, where money from new investors is used to pay returns to earlier ones, rather than being funded from genuine trading profits.

Qualia Care Properties Ltd and Qualia Care Developments Ltd were liquidated in the summer of 2022, with Qualia Care Ltd entering administration shortly after. By late 2024, five care homes had closed, with nine still operational.

In 2024, a key legal ruling at the High Court allowed investors in St Mary’s Nursing Home in Manchester to surrender their leases, enabling its sale and preventing further disruption to residents and staff.

The care home was sold in late 2024 for around £20 million, helping investors recover some of their funds. It is estimated that investors may recover around a third of their original investment.

Meanwhile, Qualia’s founder was banned from being a company director for 14 years. In January 2025, legal firm Lupton Fawcett LLP, which had promoted the scheme, settled claims without admission of liability and issued a public apology, expressing “its profound regret” at ever being involved.

Lupton Fawcett LLP also said it supported the FCA “in its message to professional advisers, namely that particular caution should be exercised in the context of providing advice in connection with collective investment schemes.”

Commenting on the Qualia case, Sarah Spruce, Legal Director at TLW Solicitors, said:

“The FCA believes that professional firms that ‘go beyond their remit by promoting unlawful investment schemes risk causing significant financial harm’. Such professionals include financial advisers, investment brokers, and lawyers.

Previously, we highlighted how conveyancing solicitors could face professional negligence claims if they fail to conduct proper due diligence in these high-risk schemes. Investors must feel confident that the professionals they instruct always act in their best interests.

Given these types of cases, I would encourage anyone who thinks that they or a loved one have lost out due to what may be a UCIS, including where you thought that your professional advisers had ‘your back’, to get in touch with my specialist team of professional negligence lawyers for a no obligation and confidential discussion. We can then explore whether you may have the basis of a claim.”