‘Best way forward’ is to support Serious Fraud Office probe, says watchdog
The Financial Conduct Authority (FCA) has closed its investigation into Home REIT without action, stating that “the best way forward” is to support a separate probe by the Serious Fraud Office (SFO).
Home REIT was launched in 2020, raising hundreds of millions of pounds, which it said it would invest in properties for homeless people, which were then let to housing associations.
However, concerns were raised about its business model in 2022 and the FCA opened an investigation in 2024, with the SFO following suit at the start of this year.
An update to market from the company itself revealed it received correspondence from the financial services watchdog last Tuesday (20 October), informing it that the investigation had ended.
“Following our extensive cooperation with the FCA’s investigation, we are pleased to announce that it has closed its investigation and intends to take no further action against the company,” said Michael O’Donnell, chair of Home REIT.
A spokesperson for the FCA confirmed that the investigation had been closed, explaining that the regulator had “carefully considered the case and believe[s] the best way forward is to support the Serious Fraud Office’s ongoing investigation”.
The FCA reserves the right to review its decision and take action if new information comes to light.
In addition to the SFO’s ongoing investigation into suspected fraud and bribery in the past management of the company, Home REIT is also facing a legal claim from more than 800 current and former Home REIT shareholders.
Lawyers representing the shareholders allege that investors were given a misleading picture of the firm, the security of its rental income, the financial strength and experience of its tenants, its stated social impact, and the acquisition, use and valuation of its property portfolio.
At the time, Home REIT declined to comment on the legal action. However, it subsequently put out a statement stating that the claim was valued by the claimants at “in excess of £10 million”, plus interest and costs.
It denied the allegations made against it and promised “vigorously to defend itself in respect of these matters”.
“The company has previously indicated that the ability of the company to make distributions to shareholders continues to be constrained whilst the company faces potential group litigation or other claims, and issuance of the claim illustrates this risk,” it said.
“The company is considering appropriate next steps with its professional advisors including the potential impact on the company’s previous announcement that any return of capital to Shareholders should be made via, and would therefore follow the commencement of, any liquidation process.”
Last month, four of Home REIT’s wholly-owned subsidiaries went into liquidation.
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