Financial Conduct Authority  

FCA eyes advisers in property scheme probe

FCA eyes advisers in property scheme probe

The Financial Conduct Authority has contacted advisers who told clients to invest in an unregulated German property scheme which went bust earlier this year holding millions in UK pension money.

In an update today (October 8) the regulator urged investors in property investment scheme German Property Group, previously known as the Dolphin Trust, to contact their adviser to complain amid warnings their funds could be at risk. 

German Property Group, which changed its name in April 2019, collapsed earlier this year and although unregulated, the regulator believes some may have invested via regulated entities such as advisers, Sipps or Ssas, and could be eligible to bring claims.

The scheme focused on redeveloping German listed buildings into luxury apartments, promising UK investors double-digit returns on their investments.

But the company has been plagued with problems as investors saw the maturity date of their investments pass without payment.

Earlier this year a review of the business was commissioned, followed by a bankruptcy filing for the whole group in late July.

Investor losses could reach millions with a BBC investigation in 2019 estimating the property group borrowed up to £600m from the likes of pension investors.

In today's update the FCA said: "A number of companies in the overseas investment scheme, German Property Group, have recently entered preliminary bankruptcy proceedings in Germany.

"This means that any money you might have invested in this scheme is at risk and you need to take action now to help recover this.

"We are working with those financial advisers we have identified as advising UK customers to invest in GPG, as well as the Sipp operators we have identified that are holding people’s investments."

In partnership with the Financial Ombudsman Service and Financial Services Compensation Scheme the City watchdog urged investors to consider bringing a claim against their financial adviser or Sipp operator if they believe the investment in German Property Group was mis-sold.

The FCA said some firms which advised on Sipp and Ssas investments into the scheme were no longer trading, suggesting a number of claims could find themselves at the doorstep of the industry-funded FSCS. 

Earlier this year FTAdviser reported the lifeboat body had begun investigating claims against German Property Group, but not all UK investors would be eligible to bring a claim as many of the investments were sold via unregulated introducers.

It came as German administrator Goerg had written to investors warning of the "total mess" it had found in the business's records.

The administrator estimated there were between 150 and 200 companies in the group and as German insolvency law requires each to be dealt with separately, the process could prove lengthy. 

rachel.mortimer@ft.com 

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