In order to secure a higher income on retirement, it is common for pension funds to be transferred into a Self-Invested Personal Pension (SIPP). The SIPP facilitates subsequent investment which, it is hoped, will generate more lucrative returns for the investor. The FCA regulates the sale of mainstream investments such as stocks, shares and funds that you may normally choose to invest in via your SIPP. However, there are a host of unregulated investments which investors have been convinced into making with their pension funds.
Many of these investments are what is known as unregulated collective investment schemes (UCIS). As the name suggests, the idea is that a host of separate investors pool their money together, for a fund manager to then use to invest in some form of asset, in this case, one which is not regulated by the FCA.
SIPPS are often used to facilitate investment into UCIS. Therefore, whilst investors may be under the impression that their pension funds are safely stored in an FCA-regulated SIPP, their retirement funds are actually invested into these high-risk, unregulated schemes.
Below are some of the most common UCIS investments that our clients’ pension funds have been invested in:
Harlequin Group: This scheme prompted investors to finance overseas property projects, including hotels and villas in the Caribbean. UK investors were pushed into putting an incredible £400 million into the firm, with only a fraction of the promised properties ever built and the chairman of Harlequin now facing charges from the Serious Fraud Office.
The Resort Group: Much like the Harlequin Group, Resort Group offered clients the opportunity to invest in holiday “hot spots” such as Cape Verde, with the promise of high returns. These investments, however, were far higher-risk than many of our clients were initially led to believe and, most importantly, were unregulated.
Store First storage pods: The purchase of storage units promised to be an investment which could provide guaranteed rental income. Clients were told of the growing demand for storage units that could guarantee growth of 5-10% per annum. In many cases, clients were promised a “guaranteed” buy-back option which would allow them to sell their investment back to Store First at purchase value.
In reality, market demand for such units was greatly exaggerated. Many storage pods have remained empty, leaving investors out of pocket. Moreover, the “guaranteed” buy-back was, in fact, a discretionary option, which Store First has elected not to exercise in most cases. Due to a lack of demand for such units, investors have been unable to rent or sell these storage pods, leaving their pension funds tied up in these illiquid assets.
Sustainable Agroenergy: This was marketed as a new, sustainable fuel alternative. It appeared to be a modern and attractive investment for some of our clients. Clients invested their pensions into Cambodian plantations, only to later discover that the investment was a sham. Although the Serious Fraud Office has obtained a freezing injunction against the company, many investors are faced with the possibility of losing a substantial portion of their pension fund.
Los Pandos: Many investors were lured in by these seemingly luxurious, high-profit investments. Los Pandos vineyards were marketed as high-end, low risk schemes but in reality were unregulated, unprofitable and unsuitable for retail clients.
Global Forestry: This was promoted as a safe, ethical investment in Brazilian teak plantations. Investors were offered the opportunity to purchase plots of land and harvest steady profits. However, this proved to be financially unviable.
Elysian Fuels: Elysian Fuels was set up by Future Capital Partners Limited and involved investment into renewable energy plants in the UK and US. However, the investment failed and investors lost large sums of money as the value of the investment shares was cut to nil in October 2015.
Parking investments: Similar to investment in storage pods, market demand for parking spaces was exaggerated to investors, leading to many of our clients’ pensions being tied up in illiquid and unprofitable land.
Australian Farmland: Companies such as GAS Verdant offered investors the opportunity to purchase plots of Australian farmland. However, the purchased plots were not properly managed, with many left unsown.
If you transferred your pension into a SIPP and invested in one of the schemes mentioned above, you may be entitled to compensation.
Our team of expert financial mis-selling lawyers will be able to guide you through the process of claiming compensation for any losses caused as a result of the negligent advice of your financial advisor or the failings of your pension provider in not undertaking appropriate due diligence.
Contact us today for free, no obligation advice.