The Financial Conduct Authority has secured £25m more compensation for 4,500 investors in the failed Park First scheme which saw investments sold to a number of SIPP investors.

The regulator has secured a conditional agreement with defendants facing proceedings related to the scheme which seek compensation for Park First investors. 

The watchdog began legal proceedings against Park First's owners in 2019 after the firm collapsed after raising £230m from 4,500 investors.

The FCA alleges the firm, which offered investments in car parks, was an unauthorised collective investment scheme (UCIS).

The conditional agreement with the FCA should see a further £25m made available for compensation to investors.

The FCA has been taking legal action against Park First Limited, its senior managers, including its chief executive officer, and a number of other companies connected to the Park First group. 

Park First has been accused of making false or misleading claims to investors that returns of 10% or 12% were “realistic.”

The FCA brought proceedings against chief executive, Toby Scott Whittaker, director John Slater and a number of companies involved or connected to the Park First Scheme. A number of further companies involved in the Park First Scheme entered administration in July 2019 and November 2020.

The FCA says the compensation agreement is conditional on Park First investors approving Company Voluntary Arrangements (CVAs) in respect of the companies.

The conditional agreement provides for a further £25m to be available to investors, on top of the £33m already secured by the FCA out of the proceeds of the sale of a car park at Luton airport.

Mr Whittaker will need to sell most of his assets to pay the £25m, which will be paid in instalments on the sale of the assets. If any instalment is unpaid, Mr Whittaker has agreed not to contest the debt for the purpose of any bankruptcy proceedings brought by the FCA.

If the arrangements are approved, the defendants will consent to orders that they breached section 19 of the Financial Services & Markets Act, 2000 by operating a collective investment scheme without being authorised by the FCA. This admission only applies to the FCA’s case. 

If the investors do not approve the arrangements and the conditional agreement, the FCA’s proceedings against the defendants will continue with a trial fixed for February. 

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The agreement, if approved, represents a better outcome in the proceedings for investors than could have achieved through continued legal action, given the financial position of the parties. It also gives investors the final say on the merits of the conditional agreement.”

The FCA first intervened with Park First in 2016, halting the operation and promotion of the original scheme. 

Following the FCA’s action, the scheme was restructured and investors were offered the chance to get their initial investment back or move into a different scheme. However, the operation proved to be uneconomic, the FCA said, and the companies involved in running the scheme entered into administration in July 2019.