Commons Sense

House of Commons · Westminster Hall

Midas Financial Solutions Collapse

22 March 2022 · 3 other contributors · 10,213 words

Opened by Alistair Carmichael Lib Dem Orkney and Shetland

Responding minister: John Glen

Business Compliance

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Alistair Carmichael raised concerns about midas financial solutions collapse in Westminster Hall. A government minister responded.

Key points

  • Concerns raised about the collapse of Midas Financial Solutions highlight regulatory oversight failures by the FSA and FCA.
  • Investors lost significant amounts, and the FCA issued an apology but refused to compensate victims left 2 million out of pocket.
  • The Financial Conduct Authority should consider making ex gratia payments to address unsatisfactory responses in similar cases.

Key requests to Government

The Financial Conduct Authority should address its unsatisfactory response by making ex gratia payments where appropriate, as it has done in other cases. The regulation of financial services needs urgent scrutiny and reform to better protect consumers and ensure that the complexities do not leave people vulnerable to fraud and out of pocket.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Alistair Carmichael Lib Dem Orkney and Shetland

The collapse of Midas Financial Solutions has left investors, including constituents who lost tens or hundreds of thousands of pounds, highly unsatisfied. Alistair Greig was convicted of fraud involving £13,281,671.25 and the case highlights issues with regulatory oversight by the FSA and FCA, including their failure to act on warnings from the Yorkshire Building Society in 2008 and 2012. The court's decision created a two-tier protection system for UK investors where those dealing directly with principals are better protected than those dealing with appointed representatives. This leaves consumers at risk if advisors operate outside their agreement, as happened in the Midas case. Investors took legal action against Sense Network Ltd and the FCA issued an apology but refused to compensate victims despite them being left £2 million out of pocket.

Other contributors (3)
  • Jim Shannon DUP Strangford

    The case of Midas Financial Solutions is distressing, with nearly 200 victims losing substantial sums. Some lost a few thousand pounds while others up to £500,000. Jim questions the FCA's delayed involvement and seeks compensation for families who have lost loved ones due to financial fraud. He highlights the unfairness of legal fees being deducted from recovered funds when only those who funded court cases can recoup their losses. Jim also calls for measures to prevent similar regulatory oversights in future, ensuring greater protection for investors.

  • Richard Thomson SNP Caithness, Sutherland and Easter Ross

    Richard Thomson highlighted the fraud committed by Alistair Greig of Midas Financial Solutions, who defrauded over 180 victims for nearly £13 million. He criticized the sleekit nature of the scheme and the regulators' failure to take action despite multiple opportunities. Thomson emphasized that regulatory failures allowed the scheme to continue and blamed the Financial Conduct Authority for not taking appropriate steps in response to whistleblowers. Economic crime, accounting for 40% of all crime, receives only 1% of crime-fighting resources.

  • Tulip Siddiq Lab Hampstead and Highgate

    Clarified the discrepancy in legal costs for Midas Financial Solutions, questioning whether the right hon. Gentleman had additional information beyond £1.5 million. Ms Siddiq highlighted the devastating impact of fraud on individuals and communities, particularly in cases like Midas Financial Solutions. She noted a significant rise in reported fraud cases despite a reduction in specialist prosecutors. Ms Siddiq questioned the Government's response to warnings prior to the collapse, emphasizing the need for better regulatory oversight.

Government Response

John Glen

It is a privilege to serve under your chairmanship, Mr Stringer, and I join others in congratulating the right hon. Member for Orkney and Shetland on securing today's debate. The minister acknowledged the role of his opposite number, the hon. Member for Hampstead and Kilburn, in championing her constituent's case over six years. He recognised that fraud damages trust between individuals and across society and is a priority for the Government, focusing on reducing vulnerabilities, catching criminals responsible, and supporting victims. He noted that Midas was founded by Mr Alistair Greig in 2006 and became an appointed representative of Sense Network Ltd in 2007, causing significant distress to individuals and families through fraudulent activities until halted by the FCA in 2014 when it included 279 members of the public who had paid £12.8 million and were owed a total of £13.6 million. The minister condemned Greig's actions unreservedly, stating that he was operating outside the authorised activities allowed under the appointed representative regime and hiding his fraudulent operation from Sense Network Ltd, which led to an FCA investigation and subsequent criminal charges resulting in 14 years imprisonment for Mr Greig in April 2020. The minister highlighted steps taken by the Treasury and FCA including a call for evidence on the regime as of December 3rd, aiming to improve public information about what activities appointed representatives are authorised to undertake. He explained that the Financial Services Compensation Scheme has paid out £9.6 million in compensation to 197 claimants by August 2020 and continues to accept claims against Midas. The FCA acknowledges prior failings of its predecessor, the FSA, in this case, and is undertaking a transformation programme to improve effectiveness. The minister concluded that the Government will continue working with regulators to protect consumers while allowing firms to operate.

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