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SFO swoops on bio-fuel firms in £32m collapse

Sipp investors are facing losses of up to £32m after the Serious Fraud Office appointed administrators to wind up a number of related “sustainable” investment companies.

Southwark Crown Court issued a freezing order last month on assets held by Sustainable Agroenergy Plc, Sustainable Wealth Investments (UK) Limited and Sustainable Growth Group (UK) Limited after a request from the SFO.

Money Marketing understands a total of 1,500 people, mostly Sipp investors, could lose out as a result of the collapse of the firms which invested in bio-fuel companies in South-east Asia.

Sustainable Agroenergy, Sustainable Wealth Investments and Sustainable Growth Group entered administration on March 15. Accountancy firm Chantrey Vellacott DFK has been appointed management receiver for the companies.

The SFO says: “The Serious Fraud Office is investigating the activities of Sustainable Agroenergy Plc and Sustainable Wealth Investments UK Ltd and associated companies in connection with selling ‘bio-fuel’ investment products involving Jatropha tree plantations in South-east Asia.”

Last week, Money Marketing revealed investors could be facing losses of up to £60m following the liquidation of specialist property investment firm Arck LLP.
Many investors used their pension savings to invest in the foreign property developments through a firm called HD Sipp. Two people were arrested and bailed this month after allegations of fraud related to Arck.

Regulatory Legal is acting for a number of investors in the sustainable investment companies. Director Gareth Fatchett says: “We are seeing a Sipp-driven unregulated investment problem. We understand there to be £32m invested in these funds. We also understand extremely high commission levels were offered to some advisers.”

Companies House lists Gary West and Gregg Fryett as directors of Sustainable Agroenergy. West declined to comment and Fryett could not be reached for comment.

A website has been created for investors at www.sgginvestors.ning.com.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. Another one to be added to our FSCS bills?

  2. …so who will be picking up the tab for this compensation then?… let me guess…more duff products, duff advice and greedy commission levels that result in blind eye syndrome… We need to come together to exert peer pressure on fellow advisers to clean up their act or get out. The regulator clearly cannot police everything and until we boot out the dross in this “profession/industry” we will simply get more and bigger requests for funds for compensation as yet more ways are found to part a fool from his money.

  3. @Dominic Thomas

    I’m rapidly reaching the conclusion that this is the only way we can reduce the level of the FSCS costs we incur each year – some type of peer review system that stops IFAs from flogging this dross in the first place.

    I’m convinced that the professional bodies have a role to play in all of this. As we all need a Statement of Professional Standing from the end of this year, and part of this involves signing up to a code of conduct and ethics, surely the professional bodies can ‘deal with’ any advisers who are exposing their peers to toxic investment schemes such as these?

  4. I think its about time that, all these unregulated investments were banned from be sold to retial investors, almost every day something goes wrong with one of them, keep it simple use only regulated funds that are diversified.

    Everything else forget it, there is a place for structured products, for a small proportion on the understanding that the client knows that they could lose all the money.

  5. Seems to me the solution is dead simple.

    Either investments are regulated or they are not. If they are regulated they can be sold and marketed in the UK otherwise they can’t be.

    If you are either stupid or greedy enough, either as an investor or adviser, to go for one of these hairbrained schemes then you a) deserve all you get and b) you shouldn’t get any compensation.

  6. man on the moon 28th March 2012 at 10:01 am

    @Dominic

    I do not agree that we should come together and ‘police’, that is the role of regulatory bodies.

    What we all should do is act honestly, honourably, professionally and fairly in client interests. This sadly is not the case in my 20 plus years and looking at other groups and professions behaviour I see no difference.

    It does amaze me that clients diversify into these investments, I think a lot of Advisors must be class sales people to be able to sell these stories.

    Diversification is one thing and these are truly diversified investments right up there with fractional ownership, car parking spaces in Dubai and holiday lets in Cape Verde.

    I hope the matter is resolved in the interest of investors.

  7. There is an assumption here that financial advice was given.

    In a lot of cases like this the investors go to seminars and make the decision to invest without the benefit of advice – if this is the case they shouldnt receive any form of compensation.

  8. Christopher Lean 28th March 2012 at 11:09 am

    Perhaps one solution would be to insist that any adviser that recommends an unregulated product must be obliged to issue a “Caveat Emptor” statement, that confirms that the product is not covered by FSCS, nor the advice that goes with it.

  9. Tim Sargisson - James Hay Partnership 28th March 2012 at 1:37 pm

    Something of a hobby horse of mine I know but what level of due diligence were the SIPP providers undertaking on these investments? IFA’s are not alone as SIPP providers have obligations when it comes to due diligence and can be reasonably considered as part of the three lines of defence in any due diligence process.

    James Hay Partnership have no exposure to this but then we believe we have a very robust process in place. However it is disappointing to report that we will turn away enquiries due to legitimate concerns only to find that this is touted around the market by an organisiation and eventually finds a home somewhere with a SIPP Provider.

  10. Has anyone signed up , the link i`ve tried is dead

  11. Gareth Fatchett 30th March 2012 at 8:53 pm

    All,

    The website link is http://www.sgginvestors.ning.com and the password is grace.

  12. There is no way of knowing. If they can set up a company in Company House under a British system, set up a business with a London city address, set up a bank account in a British Bank, and get a British Trustee to vet and issue land lease papers,.. there is one conclusion..

    Who know may be this website is also a …

  13. Regulation does not necassarily guarantee that Clients won’t lose money, afterall fund management hasnt exactly delivered over the last 20 yrs!

    If I want to invest in a product then I should have the right to do so, however I should also be given the full story, not via benefit heavy and risk light sales material.

    Let’s hope for our industry’s sake that these cases are few and far between.

  14. I think that finger pointing should stop until the SFO have completed their investigation. A lot of this type of investment is sold by non reg types, not all through SIPPs. In addition, a chunk may have been sold abroad.
    The SFO are involved for a very good reason which doesn’t mean that advisors have been at fault necessarily. Also I hear mutterings of ‘high commissions’, could someone state exactly how much SAE was paying please. No I’m not an IFA nor am I a non reg sales person. But let the system do it’s job and then vent your spleen!
    BTW, not all non reg investments are ‘hair brained schemes’, the people who think so should go take a look and learn something.

  15. I invested all my money, and they did not send/give me any form of information that I had invested!
    I want some sort of compensation, I understand that we may not get it all back but we should get something, otherwise I will have no pension and will struggle to survive when I retire, I will have nothing

  16. I invested 45k. I can’t get onto that site. Is there any other focus group

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