Tailormade, which advised on self-invested personal pension (SIPP) transfers into troubled overseas property company Harlequin and was a major distributor of Harlequin investments, is entering liquidation because it can't finance redress payments to clients.
Accountants RSM Tenon are being appointed as liquidators.
Harlequin - which has taken about £400m from investors to invest in properties across the Caribbean - has been rocked by problems since the start of the year, including three warnings by the regulator, investigations by the Serious Fraud Office and the Insolvency Service, and its sales arm going into administration.
Tailormade - which has an advice arm, an alternative investment business and a SIPP - said it stopped taking new money into the overseas property scheme in January following a Financial Services Authority (FSA) alert about Harlequin.
Advisers and agents selling clients investments in Caribbean villas run by Harlequin received commissions of up to 15%, according to a lawyer close to the situation.
Gareth Fatchett of Regulatory Legal, which acts on behalf of hundreds of investors in Harlequin, said "master agents" were paid commissions of up to 15% of the total cost price of the villas clients invested in, with sub agents receiving 9% of that.
According to a statement from RSM Tenon today, Tailormade actually decided to cease taking on all new business as of 20 January and began to conduct a review of the systems and processes it had in place for advising clients.
That review identified certain clients where redress was due, which in turn created a liability for the company.
The statement from RSM Tenon said Tailormade has now reached the point where it is unable to meet these liabilities.
It continued: "In view of this the directors sought advice on the company`s financial position, and, as a result the company has ceased trading and will be placed into creditors voluntary liquidation."
Paul Finnity of RSM Tenon Restructuring, which is advising Tailormade said: "We are working with the directors of Tailormade Independent Limited towards bringing forward the liquidation of the company."
A creditors meeting will be held at a date yet to be decided in October.
However as a result of Tailormade going into liquidation, any claims of poor advice against it will be passed to the industry paid for Financial Services Compensation Scheme (FSCS).
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