Investors in collapsed jeweller Vashi 'could be compensated' after ruling by watchdog
A financial watchdog has ruled that investors who lost money when the jeweller Vashi collapsed can receive compensation under an anti-fraud scheme. The company folded in April 2023 with debts of £170 million, and investors, many of whom are from the Middle East , believed its diamond stock would have been used to reimburse them if the company failed. But when the safes were examined, it turned…
The Financial Ombudsman Service (FOS) has overturned its earlier decision, ruling that investors who lost money when the jeweller Vashi collapsed can receive compensation under an anti-fraud scheme. Vashi, a jeweller based in the UK, folded in April 2023 with debts of £170 million. Investors, primarily from the Middle East, believed their diamond stock would help reimburse them in case of the company's failure; however, the safes revealed the stock's worth was only £114,000.
The founder, Vashi Dominguez, vanished after his UK firm was wound up, and he had allegedly raised millions using the diamond stock and inflated sales figures. Initially, the FOS rejected a claim by a group of investors that banks were not responsible for losses in Vashi under the authorised push payment (APP) scam reimbursement scheme operated by banks at the time.
However, the FOS has now changed its stance regarding the claim of a couple, Mr and Mrs C, for approximately £100,000. The Financial Ombudsman, Stephen Dickie, stated that Vashi's "supposed business model was simply a falsehood and that it was most likely a deliberate fraud." This ruling could potentially return millions of pounds to other investors under the APP scheme.
The FOS stated that neither Mr and Mrs C nor NatWest could have known about the fraud, but given the bank's obligations under the APP scams code, NatWest should have taken more precautions, especially as two payments totaling £50,000 were sent to Vashi from the couple's account within 24 hours. Michael Moszynski, a Vashi investor, welcomed the new decision, stating, "This is what we've been fighting for."
Stuart McFadden, co-founder of the fraud-recovery experts Refundee, also praised the outcome, calling it a "significant result for investors who were wrongly denied reimbursement." The Metropolitan Police's complex fraud team has launched an investigation, Operation Palisade, into the collapse of Vashi. NatWest has been asked for their response.
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