Investments  

Hartley entering administration is timely reminder of Sipp concerns

Paul Higgins

Paul Higgins

All three of these companies are now in administration and anybody who had ‘invested’ in Ethical Forestry through their Sipp has now lost everything. Victims of this form of mis-selling are the type of clients I work with. Many of whom lost tens of thousands of pounds, others lost six figures and spent many years arguing their case to the Financial Services Compensation Scheme.

There was a similar arrangement between Berkeley Burke Sipp Ltd, Jackson Francis and Store First Group. The object of the exercise behind this joint venture was to sell storage pods within a Sipp. These tripartite joint enterprises worked extremely successfully in building up all three businesses at the expense of the pension investor.

The FCA once again were slow to react. Although they did write 'Dear CEO' letters reminding Sipp companies of their obligations under the rules, there was really no follow-up and, as such, Sipp companies continued to follow their business model.

I do not believe that matters have come to an end with the administration of Hartley. There are still a number of Sipp companies that, in my view, put their own financial interests ahead of their clients, which will result in more companies entering administration.

For example, there are many clients who have 'invested' in fractional ownership of hotel rooms in Cape Verde through The Resort Group via their Sipp pensions. One particular Sipp company that is still trading has facilitated this kind of investment within their Sipp products and I believe that this will end in tears.

Fractional ownership of a hotel room in Cape Verde is possibly one of the most precarious forms of investment and, in my view and I suspect others reading this, is doomed to failure. The investments are completely illiquid and, as such, they are valued at zero, notwithstanding their apparent value.

This is another accident waiting to happen and something should be done before it is too late. Hartley is a timely reminder and I sincerely hope the lessons are not lost.

Paul Higgins is a founder of Pension Justice