Don’t let a shark swallow your savings
Chilling... ruthless... the investment tricksters with their eye on your cash
FINANCIAL sharks are routinely promoting investment opportunities that could savage people’s nest eggs. An investigation by The Mail on Sunday has revealed how a simple enquiry about safely investing money will often trigger an onslaught of sales pitches for the impossible – high reward, low-risk investments.
One such offer uncovered by this newspaper was based on investing in mineral water sourced from the Namibian wilderness. A leading financial expert describes these unregulated investments as akin to asking ‘a bloke down the pub’ to manage your investments.
INTRODUCER WEBSITES – A WARNING
AN ONLINE search for ‘safely investing money’ by The Mail on Sunday took us to the website of Safe Secure Investments.
It advertises annual returns of up to 14 per cent, with ‘options to suit all investors’ – who only need stump up as little as £5,000. By comparison, the best five-year cash savings bonds currently offer annual interest of around 2.5 per cent.
The website boasts about financial security. For example, it claims a key feature of its bonds – which purport to invest in London Crossrail and the renewable energy sector – is ‘market-leading capital protection via multi-layered security structures’.
A slick video comprises a series of slides, set to soothing music that would not be out of place in a luxury spa.
One slide reads: ‘Ensure that your capital is fully protected throughout the investment term.’ It features a hand spinning the lock of a safe. Another reads: ‘FCA [Financial Conduct Authority] regulated advisers and service providers’. Yet the website is not regulated. The Mail on Sunday showed the marketing material to financial expert Tom McPhail, of Hargreaves Lansdown. He said: ‘It is offering doubledigit returns with low risk. That is simply not possible.’
The Mail on Sunday asked Safe Secure Investments to comment on the outlandish claims made on the website. Sheila Willshere, director of Direct Property 2015 Limited – the company behind it – insisted that risks are suitably flagged ‘at various points in the engagement process’.
She added: ‘We do not attempt to hide these risks or downplay their significance. It is entirely the investor’s choice if he or she wishes to proceed.’ Willshere also said ordinary investors are ‘explicitly excluded from making an investment into these products’.
She denied that the claims of financial protection were meaningless, adding: ‘All of the investments we offer are protected in a number of different ways.’ All introducer websites related to investments and pensions should be treated with caution. Some invite older savers to undergo a free pension review or to unlock pension cash early. Often they give the pretence of being experienced financial specialists with ‘proven track records’ when nothing could be further from the truth.
INVESTMENTS
THE only way to find out more about the products offered by Safe Secure Investments was to request a brochure – providing a name, contact number and email address.
No brochure was forthcoming from Safe Secure Investments but the contact information provided to the website triggered dozens of emails and a handful of calls from Direct Property 2015 to discuss various financial deals. One email mentioned ‘a fixed return from a highly secure investment opportunity’. It also prompted a request to complete a self-certification form, confirming the recipient’s status as a sophisticated or high net-worth investor.
At this stage warnings were given that the investment promotions exposed individuals to ‘significant risk of losing all money’. A caveat coming after many reassurances that the opportunities were secure.
Another unregulated company emailed details about an investment in bottled mineral water, sourced underground in the Namibian wilderness.
According to the brochure this brand of water is ‘known for its fine texture and taste’ and the ‘opportu-
nity offers annuity type income of 5.29 per cent per annum’. Willshere says her company has no involvement with this investment.
HALLMARKS OF DECEPTION
COMMON features betray introducer websites that paint risky investments as safe.
If the only way to find specific information about an investment requires customers to supply personal contact details, be wary. Most likely, the website only exists to capture names and numbers to pass on to unregulated companies.
Such websites and subsequent cold-callers will also downplay investment risk, exaggerate investment returns and in some cases fail to mention charges.
Introducer websites and unregulated financial companies often use a centrally-located London address to suggest legitimacy. But these are often managed offices where desks and phones are easy to rent short-term.
Anyone looking at such a website should scroll down to the bottom to find further information about the company. Often there is an admission that it is not regulated or authorised by the Financial Conduct Authority.
McPhail says: ‘The first rule of investing is only to deal with regulated advisers and investments. Not only does this significantly reduce the risk of something going wrong but if it does, you have a complaints system and compensation scheme to ensure you are treated fairly.’
He adds: ‘If you deal with unregulated advisers or investment schemes, it is no different from handing over your money to a bloke down the pub.’