The Financial Services Compensation Scheme has taken the unusual step of withdrawing its default notice on former advice firm IFG Financial Services Ltd (IFGFS).

The FSCS said that new information had emerged that a firm within the group was still in business and may be able to deal with an outstanding claim.

Last week the FSCS declared IFG Financial Services Ltd (FRN: 114664) as failed and in default.

A declaration of default enables former clients of a firm to claim compensation from the FSCS. The reversal of default means the FSCS will no longer consider claims against IFGFS.

The firm, a major advice business, had a long history from 1984 until it ceased to be authorised by the FCA in January 2016 after being sold to advice firm Ascot Lloyd.

IFGFS received five complaints against the firm but only one, for pension transfer advice, was upheld. 

Today the FSCS said it had reversed its earlier decision after receiving new information.

In a statement the FSCS said: "IFG Financial Services Limited (formerly IFG Life & Pensions Limited) t/a Goldstone Financial Service (“IFG”) (FRN: 114664, Company No: 010667780) was declared in default by FSCS on 2 November 2022. The firm was dissolved on 31 December 2019.

"FSCS has subsequently become aware that liability for any claims against IFG may sit with another firm that is still in business. FSCS is currently speaking to this firm to establish where customers should direct their IFG claims. 

"In the meantime, FSCS has withdrawn the declaration of default and amended its records accordingly. This means that FSCS is no longer able to consider claims against the firm. FSCS will be contacting any affected customers directly."

Financial Planning Today understands it is rare but not unknown for the FSCS to reverse defaults if new information comes to light.

Firms are usually declared in default or 'failed' by the FSCS when there are believed to be insufficient funds to meet compensation claims.