Midas Financial Solutions was closed down in 2014, taking about £13 million of investments with it. After investigation, the director of Midas, Alistair Greig, was sentenced to prison for fraud. Mr Greig owned Midas, which was an ‘appointed representative’ of another firm. Investors took unsuccessful legal action against that firm. The judgment did however establish their right to the Financial Services Compensation Scheme. This does not cover their legal costs.

The collapse of Midas

Midas Financial Solutions Scotland (MFSS; company number SC307066) operated between 2006 and 2014 as financial advisers and ‘appointed representatives’ (ARs) of Sense Network Limited, which was regulated by the Financial Services Authority (FSA) and its replacement, the Financial Conduct Authority (FCA).

An ‘appointed representative’ runs regulated activities and acts as an agent for a firm that the FCA directly authorises. That firm, known as the AR’s ‘prinicpal’, is responsible for ensuring that the AR complies with the FCA’s rules. Arrangements are set out in a contract.

After receiving complaints, Police Scotland and the FCA investigated MFSS and Alistair Greig in relation to accepting deposits without the necessary authorisation required under Section 19 of the Financial Services and Markets Act 2000.

By September 2014, 279 investors had deposited £12.8 million (PDF) and would be owed £13.6 million upon maturity of their investments. While the FCA closed down MFSS’s activities at that point, it found that the deposit scheme was unauthorised and so outside the scope of the Financial Services Compensation Scheme (FSCS), leaving investors without recourse to compensation.

MFSS was dissolved in 2016 and Greig was made bankrupt. Mr Greig was sentenced to fourteen years in prison for fraud in April 2020. His sentence was later reduced to ten years.

The FCA took civil action to stop the activity and obtain compensation for victims, The FCA alleged that Greig had set up a separate bank account to receive investments and so avoided detection by Sense.  As a result of those proceedings, the FCA recovered about £380,000, which has been distributed to victims.

Investor court case

In 2018, 95 investors took Sense Network Limited to court to try to establish their liability for the losses incurred. The judge found in favour of Sense (PDF), referring to the nature of the contract between Sense and MFSS, the due diligence undertaken by Sense and, more generally, the fact that Alistair Greig had hidden the scheme from Sense, avoiding controls put in place.

The claimants appealed against the decision, highlighting what they saw as ambiguities about the role of Sense in relation to the financial product being offered, as well as whether Sense had adequately reviewed concerns raised in 2006-7 about Alistair Greig’s purchase of an investment property. The Court of Appeal dismissed the appeal in July 2019, agreeing that Sense was not liable for the losses they had incurred.

But the judgment concluded that the Midas scheme had in fact constituted a collective investment scheme, bringing it under the scope of the of the Financial Services Compensation Scheme (FSCS).

The FSCS investigated the case and began paying compensation to victims of the fraud. By May 2020, the Financial Services Compensation Scheme had paid out £2.3m to investors in the MFSS scheme.

Investor concerns

The case has highlighed the complexities and lack of clarity of the contractual relationships between regulated advisers and appointed representatives, as well as the way that regulators detect and challenge activity that should be regulated.

Although the investors have eventually succeeded in their right to compensation, many argue that this has only happened as a result of their efforts over many years, most importantly funding court cases that have cost them £1.5 million, which is not covered by the FSCS.

The first court case considered concerns raised earlier about Mr Greig’s activities and how Sense had investigated them (PDF, paras 400-456). While these highlighted some warning signals, the judgment concluded that they would not have been sufficient to close Midas down.

The Daily Mail discussed the lack of clarity about the role of appointed representatives in 2014:

Dealing with an authorised firm means investors should have financial protection if things go wrong. This could be compensation if the adviser firm collapses or recourse to an arbitrator in the event of a disputed complaint.


‘Such unregulated investment schemes, sometimes promoted by regulated companies, are a menace and a plague,’ says Paul Crutchley, a solicitor with Birmingham-based law firm Regulatory Legal. ‘We need greater scrutiny of this area to prevent yet more investors falling victim to financial sharks.’

Midas Financial Solutions offered customers the opportunity to enjoy preferential savings rates from the Royal Bank of Scotland by putting money on short-term deposit – terms typically ranging from ten weeks to a year. Once the term came to an end, savers were then offered a new deal – and most people duly rolled their money over into it.

The rates offered were attractive enough to persuade savers to keep their money with Midas – without being so spectacular they would raise suspicion they were too good to be true.

Savers were comforted by the fact that all savings accounts offered by mainstream banks and building societies are protected by the Financial Services Compensation Scheme – up to £85,000 per institution.

The FCA provides guidance about using and overseeing appointed representatives.

Consultations on appointed representatives

Nevertheless, the role of appointed representatives (ARs) has continued to cause concern.

In July 2021, the Treasury Committee reported on lessons from Greensill Capital, recommending that the “FCA and HM Treasury should consider reforms to the appointed representatives regime, with a view to limiting its scope and reducing opportunities for abuse of the system.”

The FCA launched a consultation on the oversight of ARs on 3 December 2021, noting:

The FCA is seeing a wide range of harm across all sectors where firms have ARs. This harm often occurs because principals don’t perform enough due diligence before appointing an AR, or from inadequate oversight and control after an AR has been appointed.

The FCA’s proposed changes to the regime aim to address the harm arising in this market while retaining the cost, competition and innovation benefits the AR model can provide. The proposals would improve principals’ oversight of ARs and require principals to provide the FCA with more information on their ARs, allowing the FCA to spot risks more quickly.

On the same day, HM Treasury published a call for evidence to gather information about how the regime is used and how well it works in practice.

Both consultations closed on 3 March.

Further reading

In-depth feature article

King of the swindlers by Dale Haslam, The Courier, 2021 (an in-depth account of the affair)


Media articles

FCA’s scrutiny of ARs force networks to ‘re-evaluate’ models, FT Adviser, 16 March 2022

Fraud victims left shocked as King of the Swindlers Alistair Greig has sentenced slashed, Press & Journal, 11 May 2021

Fraudster Alistair Greig who swindled £13m from clients and friends has just £830,000 courts can seize, Press & Journal, 22 March 2021

‘Still millions out of pocket’: £13m Ponzi schemer’s 95 north-east victims hit out at lack of compensation, Press & Journal, 10 August 2020

FSCS pays £2.3m to victims of jailed adviser, FT Adviser, 19 May 2020

Fraudster Alistair Greig jailed for ‘cruel’ £13m investment lie, BBC, 15 April 2020

FSCS confirms Midas Financial Solutions operated Ponzi scheme, Finance Feeds, 6 March 2020

Aberdeenshire Midas victims issue plea to others to join them in legal action, Press & Journal, 5 February 2015

‘I stand to lose £83,000’: How the City’s ‘policeman’ failed to protect savers hoodwinked into an investment scheme, Daily Mail, 29 November 2014

Legal documents

Adam Anderson & Others v Sense Network Ltd,  [2019] EWCA Civ 1395, July 2019

Adam Anderson and others v Sense Network Ltd (PDF), [2018] EWHC 2834 (Comm), October 2018

Government and regulatory documents

Midas Financial Solutions (Scotland) Ltd – Financial Services Compensation Scheme 

FCA proposes stronger requirements on oversight of appointed representatives, Financial Conduct Authority, 3 December 2021

The Appointed Representatives Regime: Call for Evidence, HM Treasury, 3 December 2021

Appointed representatives and principals, Financial Conduct Authority, 23 October 2019

Parliamentary material

Treasury Committee, Lessons from Greensill Capital, HC151, 20 July 2021

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