The Solicitors Regulation Authority (SRA) has carried advice and warnings about solicitor’s involvement in Collective Investment Schemes since at least 2013. The SRA say:
“We have warned for a number of years about the risks posed by dubious or questionable investment schemes………Schemes are being promoted as involved in the routine buying of a property when in reality the buyer’s money is being used to finance a high-risk development or refurbishment. This is of particular concern in unusual developments such as the buying of individual hotel rooms, rooms in care homes, or self-storage units………We are seeing cases of solicitors simply processing transactions for buyers while adopting the language of conveyancing. The effect is to mask what is really happening………….The Serious Fraud Office have previously investigated losses of up to £120m arising from the promotion of self-storage schemes……………..Many of these schemes are likely to be "collective investment schemes" under section 235 of the Financial Services and Markets Act 2000. If those involved in the schemes are not authorised by FCA, they will be committing a criminal offence and are likely to be imprisoned.”
Unfortunately, those high-risk firms of solicitors chose to ignore the advice of their regulator and continue processing these types of transactions. Some created conveyancing factories doing nothing else but acting on the purchase of these schemes. One particular lawyer, a partner in a Yorkshire based firm was heard to say to a proposed developer, “I don`t care if you`re selling a collective investment scheme as you`ll go to jail not me.”
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