Harlequin Property, a UK-based overseas property sales agent that is not regulated by the Financial Services Authority (FSA), is having "severe" problems issuing payments due under the terms of its agreement, with some investors having payments missed for the second consecutive month.
Thousands of investors have put money into the scheme run by Essex-based Harlequin, which has promised to build luxury villas in St Lucia, St Vincent, Barbados and the Dominican Republic.
Under the terms of its agreements with investors, Harlequin pays the interest on borrowings where investors have re-mortgaged their homes to invest in a Harlequin property in the Caribbean.
The interest is paid until the completion of the off-plan property the investor has invested in.
Last month, IFAonline revealed that one investor, who did not want to be named, contacted Harlequin after the company failed to pay the interest on a loan the investor had taken out in order to invest in a Harlequin property.
Harlequin has previously dismissed the problem as a one-off banking error. However, IFAonline has now seen further correspondence between investors and Harlequin in which Harlequin admits that the problem is "far more severe than first thought", though it said it expected the problem to be fixed in the next three weeks.
Some investors have now not received interest payments due to them for two consecutive months, and said they are being forced to find the money to pay for their loans themselves.
A spokesperson for Regulatory Legal, which is acting on behalf of investors in Harlequin, said: "Investor confidence is draining away and Harlequin needs to address why it is not paying interest payments."
Today, the FSA confirmed it has written to pension providers asking them for details of how much members have invested in Harlequin Property, as part of "steps to establish levels of business with Harlequin".
It is the regulator's second look at Harlequin. In January, the FSA issued an alert to financial advisers relating to investing clients' money in Caribbean property through Harlequin Property.
In the alert, the FSA highlights that it has seen an increasing number of self-invested personal pension (SIPP) schemes whose underlying investment is in overseas property purchased through Harlequin, and warned advisers to give "careful consideration" to the particular features of such an investment.
The Serious Fraud Office (SFO) has also been called in to investigate Harlequin Property, according to reports.
David Ames, 61, who runs the company with wife Carol, also 61, and son Daniel, 35, has strongly denied misleading investors, and said he has been duped by contractors which are now the subject of legal action and that all the projects will eventually be completed.
Harlequin could not be reached for comment at the time of publication.
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