In the world of financial planning, few things are as critical as securing a comfortable retirement. There are multiple ways for the financial industry to assist people to grow their retirement savings and for many, this means entrusting their hard-earned money to pension providers.
But what happens when the people you trust to increase your retirement savings, encourage you to take your money from a safe investment to an investment with a high-risk nature?
In this article, we examine the facts behind SIPP investments and, more specifically, those associated with The Resort Group. If you were encouraged to transfer your pension to fund hotel developments, you may be eligible for a compensation claim. Read further and find out if your case qualifies.
Who are The Resort Group?
Resort Group Investments are prominent players in the real estate industry, known for their hotel developments in Cape Verde. They have successfully built five hotel developments, transforming the picturesque Cape Verde islands into a hotspot for holiday enthusiasts. However, their association with SIPPs has stirred up significant controversy.
Why could they use SIPPs to build resorts?
The Resort Group opted to use SIPPs as a means to fund their ambitious holiday resort projects. SIPPs provided them with a unique investment vehicle that allowed individuals to invest their retirement savings into overseas property investment.
Whilst some of these investments were promoted by UK-regulated advisors many were not regulated. However, they soon raised eyebrows within the financial community, as funds were taken to secure the building of holiday resorts.
The Resort Group set up a telesales centre in Derby which later became the subject of a BBC Panorama investigation. The call centre and The Resort Group PLC also had connections with an unregulated pension advice review company called First Review Pension Services whose purpose was to arrange transfers of pensions into SIPPs. The pension monies transferred into the SIPPs were then used to “invest” in the Cape Verde projects.
With financial markets deeply impacted in 2008, the marketing brochure for The Resort Group spoke about 20 percent annual returns on the apartments. Many people were convinced to invest their personal pension funds into the scheme.
The dealings of unregulated financial advisors became a concern for those in the financial industry whose role was to protect individuals against pension mis-selling, such as the Financial Conduct Authority.
When are SIPPs a risky pension investment?
SIPPs were designed to enable experienced amateur investors to pick and choose their own investments. If a person has no investment experience, or any interest in the Stock Market, then SIPPs can be a bad idea.
In the case of The Resort Group, financial advisors played a crucial role in promoting SIPPs as an investment wrapper for investments within The Resort Group, often using heavy handed tactics. The Resort Group Cape Verde relied on the bad and misleading advice of these financial advisors to raise funds for their developments.
All of the “investments” in The Resort Group were unregulated and therefore the products themselves did not have the protection of the Financial Services Compensation Scheme. No competent financial advisor should have ever recommended The Resort Group as an investment. Indeed, in many cases investors transferred their pension after receiving advice from an advisor who was not regulated by the Financial Conduct Authority.
SIPP companies could, of course, have refused to allow pension investors to hold “investments” in The Resort Group within their SIPPs but chose to turn a blind eye to the fact that this was possibly one of the worst kind of investments being recommended by advisors who were not qualified to give advice on pension transfers. Two SIPP companies in particular were guilty of failing to carry out sufficient due diligence, namely Rowanmoor SIPP and Careys SIPP. Of course, Rowanmoor are now in administration and Careys have been taken over by Options UK Personal Pensions LLP.
How did financial advisors benefit from the SIPP mis-selling?
Mis-selling of SIPPs was fuelled by high-pressure sales tactics employed by financial advisors. These tactics included:
- Celebrity endorsements – This relies upon the fame and credibility of well-known celebrities to sell a service or product. There is a reduced scepticism when celebrities endorse something and this leads to false confidence amongst investors.
- Cold calling – This sales tactic puts pressure on people using a sense of urgency. Words such as ‘one time offer’, ‘expiring today’, and ‘unbelievable returns if you buy in now’, are used to force a quick decision.
- Offering free pension reviews – This tactic causes a problem where there isn’t one. By reviewing your current pension, the impression of lack is created and the solution offered is the SIPP.
- Encouraging investors to make pension transfers from secure schemes to high-risk SIPPs that offer high returns over a short period.
What appeared on the surface to be a reliable and appealing investment led to unsuspecting investors being lured into the scheme, often to their detriment.
What happened to the money invested in the SIPPs?
Properties in Cape Verde were being marketed at multiples of their market price. However, to enable “investors” with relatively small pension pots to become involved, The Resort Group agreed to sell a fractional interest in a property. For example, it was possible to purchase a quarter share in a studio apartment. Many “investors” were attracted to the idea of investing in Cape Verde by glossy sales brochures and very often didn’t see the property before money was transferred.
In addition to overpaying for an overseas property with monies from their SIPP many “pension investors” have not received the returns in rental income that they were promised. Whilst many pension investors would now wish to dispose of their “investment” in The Resort Group, many find it difficult, if not impossible, to source a buyer and, as such, they are now saddled with an “investment” which is illiquid and produces little if any income.
Are you able to claim mis sold SIPP compensation?
If you have been a victim of mis-sold SIPPs involving The Resort Group or any other similar case, you may be eligible to claim compensation.
Seeking expert advice is crucial to understanding your options and the potential for compensation. Mis sold SIPP compensation claims can help you recover your losses and secure your financial future.