Case study: I felt encouraged by the govt to transfer my pension

Davis, a former civil servant, says he was under the impression after listening to various official channels that investing his pension in the way he was about to was the proper thing to do.

Nevertheless he set out to do due diligence on the introducer, the company and the investment he was about to make. He checked the Financial Conduct Authority register and spoke to his pension provider and a solicitor, and says neither raised any red flags about the proposition before him.

Davis ended up consolidating £110,000 worth of pensions into a small self-administered scheme to be invested in The Resort Group, a hotel development in Cape Verde.

This is a legitimate, though unregulated, scheme and most of the properties offered to UK investors have actually been built. But the investments were unsuitable for the majority of the investors that were targeted, as they were unregulated and high risk, whereas investors like Davis were ordinary pension savers.

Assured by what he had found, he contacted Aitchison for a meeting about a month later. 

Davis maintains he was led to believe that Aitchison was acting as his adviser, something Aitchison disputes.

He says he was employed in an administrative function, effectively delivering reports prepared by external independent financial advisers to clients who had sought pension advice. He says he never gave retirement advice, was only brought in once the deal was agreed with the advisers, and that Davis had spoken to the actual adviser on a number of occasions.

Davis confirms he has spoken to another man, but thought he was Aitchison's business partner or boss.

Aitchison said: "These clients in their entirety, had chosen of their own volition to sign letters of authority, allowing for a bespoke report to be prepared for them. I was not privy to, nor involved in that process.

"Once their report was completed, I was tasked by my employers to deliver said report and let the client deliberate and decide what to do. I always made it clear that I was not there to advise them.

"I prided myself on delivering the reports in a professional manner and allowing the clients to choose their own path. I am not a qualified financial adviser and I never purported to be so."

We have heard similar stories from a number of investors in the same scheme. Often they were seen by an introducer and their pension transfers were handled by another adviser in the background. But Davis seemed unaware of this fact, though he did think Aitchison was reading from a script.

Davis says the deal was offering him an opportunity to enhance his lump sum for when he turned 65, and a better income in retirement.

It was late 2014, in the run up to pension freedoms, when advertisements about new possibilities to enhance a person's retirement were flourishing.

Davis says he thought investing his pension in this way was what the government wanted him to do. 

He maintains that when he called his civil service pension provider he was told there was no legitimate reason for him not to transfer and that many other people were doing it. Then his pension was transferred out.

The government maintains there was plenty of advice available for people thinking to transfer their pensions. It also introduced Pension Wise, a free pension guidance provider, to help people make financial decisions, something the government deems to be their own responsibility.

Davis says he wanted a better income in retirement but he was always looking for stability and guarantees.  

Taking on a lot of extra risk was never part of the equation, and the way Davis says the investment was sold was not as more risky, just different, and more appropriate for his retirement needs.

Aitchison did mention the risk of investment returns fluctuating, just as they would do with his existing pension.

Davis invested £110,000, of which £78,500 was put in two fractional ownership shares in an off-plan hotel development in the White Sands resort in 2014.

As the resort was not yet operational, Davis was offered an agreed percentage return on his investment until the resort opened, at which point he would be rolled into the rental programme, when returns would depend on the occupancy of the rooms.

However, the shares were then switched to a single fractional share in an apartment in Llana Beach, a different resort that was to open sooner, and £32,000 was invested in another fractional share in Llana in July 2015.

Once rental income started on his £32,000 Llana Beach investment in April 2016, the first to become operational, returns were not as he had expected.

Covid-19 had made the investors' situation worse, as hotels were unable to operate, which created huge backlogs for payments and disagreements over when and why fees should be paid.

Many investors like Davis decided to stop paying the fees associated with their investment during that time.

TRG did not comment on Davis's allegations but says it has now reached an agreement with the Cape Verde government that will secure funding for the completion of the White Sands resort, which it dubbed as a "turning point for investors", pending satisfactory due diligence of the project.

"We have consistently promised that we will deliver White Sands," says founder and executive chairman of TRG Rob Jarrett. "This is an important turning point for all stakeholders in White Sands, our clients, our own team and not least for the people of Cape Verde."

The scheme was sold in two ways: bricks and mortar hotel rooms and fractional ownership. Sales were widespread in the UK, but concentrated heavily around certain pension providers such as Rowanmoor, which eventually collapsed under the weight of TRG complaints.

The Financial Services Compensation Scheme now deems fractional shares as illiquid and without value and has started to compensate investors. 

Davis maintains he had agreed with Aitchison that he wanted to take a regular income in retirement and he was projected an annual income of £11,000 plus state pension. Aitchison says he only quoted the figures supplied by the advisers.

But when Davis approached the property scheme they told him he had to sell his shares in the properties to get this amount of money out, something that took him by surprise.

TRG meanwhile has been trying to buy back properties sold to UK investors. Davis says he was offered €30,000 (£26,500) for his shares, a fraction of his original investment, which he refused.

carmen.reichman@ft.com