Beware the investment Trojan horse
Investors are told to put their trust in firms regulated by the City watchdog. But this is just half the story, Laura Miller finds
Three men wait at the bar. One is so drunk he can barely stand, but he’s propped up by his friend, who in turn leans on the third man, who is sober. Staff are told not to serve drunks but the barman can’t tell who to cut off because the three are holding each other upright. All are obliged. Soon after, the drunkest suffers a nasty fall. The ensuing chaos costs the barman his job.
Thousands of British investors are backing shaky investment schemes on a similar mirage of stability. Reassured by the involvement of legitimate Uk-based companies, they end up robbed of millions and their financial security.
Darren Cooke, independent financial adviser at Red Circle, said: “These arrangements exploit people, convincing them to invest in high risk schemes often based offshore.”
Almost all firms offering financial services in Britain must be authorised by the Financial Conduct Authority and play by its rules, but high-risk investments often involve multiple companies in different countries.
If something goes wrong, unravelling who is culpable for your loss is labyrinthine. Each company will only address responsibility for its small part of the transaction, pushing investors from pillar to post in search of their money.
Investors in overseas schemes are particularly vulnerable to this. The shadiest companies will take no responsibility and chasing your losses from thousands of miles away can be gruelling.
One retired couple, both former teachers, told that they lost a grand total of £345,000 in four different schemes this way, 86pc of their investment.
Mr Richards, not his real name, said: “We worked for 40 years, never took holidays and in our spare time renovated our house. We sold it and when the £400,000 came through we wanted to invest for our retirement in line with our moral compass.”
In 2016 the couple saw an internet advert that led them to Bar Works, a scheme that tapped the trend for freelancing by renting desks in