Harlequin property SIPP mis-selling scandal

Pension

If you were told by your financial adviser to move your pension retirement savings into a SIPP (self-invested personal pension) you might have been a victim of mis-selling.

SIPPs can better be described as personal pension schemes and not only investments can be held but multiple products too.

SIPPs grants one managerial control over their investment, meaning you can exercise full control about where your money can be invested. Many seasonal risk takers heeded to their financial advisers and seized this once in a life opportunity by using their retirement funds to make their investment, little did they know that the advice they were given was going to give them a run for their money as many investors lost their retirement funds.

SIPP`s requires high fees and these potential investors were easily persuaded because of how much they can expect as a return on their initial investment. There are multiple reasons why many of those who invested into SIPP lost large amounts of money one of these are making direct payment of savings into investments abroad which is risky. SIPP is a legitimate governmentally approved scheme introduced in the United Kingdom in the year 1989 and compared to other savings they are riskier. Investments that are made abroad are riskier and mostly when they relate to property and the FSCS have set aside millions for mis sold sipps to pay for compensation investors lodged complaints regarding their mis-selling of investment.

Harlequin property accepted an estimate of 400 million euros from investors from SIPP`s (UK investors pension funds) to build 6 000 hotels and rental properties in the Caribbean’s, only agents benefited from this investment as they were paid a commission. At the end of the day, out of 6 000 properties that were supposed to be built only 300 were successfully built.

This was a high-risk investment that many financial advisers together with other marketing businesses convinced their clients to invest their retirement savings into Harlequin properties as it was a profitable investment and these investors mis-sold.

Why did many independent financial advisors together with many investors put so much trust in such high-risk investment of property?

Persuading someone to do something risky has never been this easy, as there are multiple marketing companies who know just about the right marketing strategies and psychological tricks to manipulate just about anyone to do just about anything. Many marketing companies went out of their way to effectively market the upcoming developments off the Harlequins property in such a way that it was more than appealing. So, once you get your most trusted financial advisors involved convincing potential clients is more easier.

Hence it is more than obvious that you would go all in even as a seasonal investor because you trust your financial advisor and are looking forward to a high rate of return to your investment. It is very unfortunate that the supposed hotels and properties that were to be built, weren’t a success and the investors lost their retirement savings.

So, what is it that these investors expected to receive out of the harlequin property investment?

  • Own a share in a luxurious 5-star property
  • Receive an annual rental income or at least 10% or more
  • The property development would result in 90% occupancy

Not only would there be 6 000 property development of hotels and properties, but a resort and hotel boutique were to be built So, in the year 2013 the Buccament Bay finally opened its resort and went to great lengths to promote it.

They chose to use well known and recognized brands to do so. Football and tennis players were used an ultimate marketing brand to persuade many people to make an investment. So as the Buccament Bay commenced with their property developments, they later failed to pay their employees and soon their employees up and left the company in severe financial distress from this point on there were reports of looting, unfortunately they landed in bankruptcy and an amount of 200 million euros went unaccounted for.

There was mismanagement of funds and this left many investors who had made an initial deposit of 30% or even more, to be in so much financial distress. Many investors are victims of mis-selling their retirement funds for a total loss. Fortunately, one can still claim for a compensation with the FSCS or they can use companies to help claim back there mis sold pension for them, who charge a fee for the service they provide but ensure the case is ran successfully.