We have recently experienced an unprecedented influx of new instructions from individuals who have invested in storage pods through their Self-Invested Personal Pension (‘SIPP’).
The basic premise of how storage pod investments work is that the investor buys a certain number of storage units or “pods” which the storage company then manages the rental of. The fees from the rental of the pods are what constitute the potential for a positive return of the investment.
Storage pod investments including investments in Store First are usually non-regulated. They are considered to be high risk, speculative and unsuitable for Retail clients. Despite that, these are very often marketed and recommended to inexperienced clients while not taking into account the client’s level of sophistication. The investment and the risks it entails are not clearly explained and most such investors do not understand what they are investing into.
Such was the case with our client Mr H, who was recently awarded an interim payment by the Financial Services Compensation Scheme (‘FSCS’).
Mr H had traditional pensions with a total value of £88,918.82 that were transferred into a SIPP on the advice of his Independent Financial Advisor (‘IFA’).
In some cases, where the investor is advised appropriately and the risks are clearly explained to him, SIPP investments can be a profitable venture with stable returns. This is usually the case with regulated investments.
In this case, however, Mr H did not receive appropriate advice from his IFA, who recommended that he invest in storage pods. The investment was high risk and was unsuitable for an investor with a ‘low’ risk profile like Mr H.
Despite the promise of high returns, Mr H received little to no income from his storage pods. Seeing that the investment was not what he bargained for, Mr H turned to Hugh James in an attempt to recover some of his pension monies to enable him to retire at the age he had planned.
After submitting his claim to the FSCS, Mr H was awarded an interim sum of £35,470.91.
The FSCS maintains that they are unable to fully calculate Mr H’s losses and pay final compensation until the investment has crystallised, which would occur in the case that the store pods are sold or the operator went into liquidation. In that case, Mr H’s losses would be quantifiable.
We continue to advise Mr H and on his claim as well as hundreds of other individuals in similar circumstances.
Visit our financial mis-selling page for more information and to get in touch for a free, no obligation consultation.