THOUSANDS of people who invested in a Basildon-based Caribbean luxury resort would have no access to official compensation if the scheme collapsed.
The Financial Services Authority, the UK finance watchdog, has issued an official “alert” concerning Harlequin Property, based in Honywood Road, which has taken an estimated £300million in deposits on the properties.
Many invested using their pensions and others remortgaged homes to pay deposits.
Since last April, the Echo has revealed the firm has sold at least 6,000 holiday rooms across seven resorts but only built about 300 at one of them.
The FSA notice explains that Harlequin is not authorised or regulated by it, so there is no Governmentbacked protection scheme.
The investments are often sold through a network of third party agents, including independent financial advisers, who have to be regulated by the Financial Services Authority. The Financial Services Authority has issued the warning because of this.
A spokesman said: “We put alerts out for a variety of things, such as things we have concerns about. The Harlequin alert is being sent out by letter to every independent financial adviser in the country, regardless of whether they sell it or not.”
The notice reminds advisers of their responsibilities to investors.
It states: “The Financial Services Authority expects advisers to have undertaken thorough due diligence on the various developments being sold through Harlequin Property to fully satisfy themselves that it is a suitable investment.”
A spokesman for Carter Ruck, Harlequin’s solicitor, said: “The notice simply provides guidance to regulated advisers as to due diligence they should undertake prior to investing in Harlequin.
“Harlequin fully endorses that guidance, both for regulated Independent Financial Advisers and non-regulated agents who are selling its properties. Harlequin worked with the FSA in drafting the notice. This guidance is also reflected on Harlequin's website. Such guidance reflects best practice and is entirely commonplace for investments of this kind.”