Advisers have hit out at a fund group offering 10 per cent “assured” returns on unregulated investments in care-home rooms.
The “socially responsible” investment has been marketed to advisers by St Camillus Care Group Ltd and assures double-digit returns for 10 years. The investor also has an assured buyback after 10 years at 110 per cent of the original price of the room.
Investments start at £49,950 for a room at an autism respite and training facility for young adults in Blackpool.
St Camillus lists a further advantage of the investment as its being “tax efficient”.
“[This is] a secure and proven investment opportunity from the trusted name in investment which offers an excellent alternative to UK buy-to-let investment by generating competitive returns over the medium and long term,” the marketing material sent to IFAs and seen by Money Marketing reads.
Signpost Financial Planning director Nigel McTear says: “I have that down as dodgy…. I’ve not seen it up close and it may be the best thing since sliced bread but I would be very cautious. Really, I wouldn’t want to touch it with a bargepole.”
McTear says the scheme reminds him of another that allowed investors to buy shares in luxury London hotel rooms that subsequently failed.
“That one ended in tears and I think this one might go the same way.”
Wingate Financial Planning director Alistair Cunningham says: “I can’t fathom how they can get a 10 per cent return and 110 per cent buyback, but needless to say I wouldn’t touch it.”
The FCA has previously warned firms against offering “guaranteed” returns on investment.
However, Andrew Pritchard, managing director of Success Investment Group, an introducer that works with St Camillus, says the firm has not promised “guarantees” but “assured” payments because investors take on leasehold interests and sub-lease as landlords.
The list of contacts the material had been sent to was not primarily directed at advisers, he adds, only those who opted in, and the company had already run a similar scheme successfully elsewhere in the country.
Pritchard says: “The product itself is fantastic. It’s been active for a few months and we have client testimonial that it works really, really well.”
On his LinkedIn page, Pritchard also describes himself as a “cryptocurrency educator”.
His FCA register entry lists him as a former adviser at network Sesame, which has now closed to investment advisers, and Cornwall firm G & W 5, which was wound down by former regulator the FSA for failing to pay a Financial Ombudsman Service award for compensation against it.
St Camillus declined to comment.