Many mis-sold SIPP investments have just one major hook, albeit a compelling one – the promise of significant returns. This hook is often dressed up in different ways, but the focus is the same, i.e. the investment will make more money than your pension is making now.
Sustainability schemes are a small, separate category of mis-sold SIPP scheme. This category uses two hooks:
- The first is, as expected, the promise of big returns
- The second is the fact you are investing in something that is sustainable and that helps the environment
For many people, the second major hook is just as compelling as the first.
Banking on the Desire for Eco-Friendly Investments
Green Oil Plantations is a good example of how salespeople and financial advisors use sustainability schemes to mis-sell SIPP investment products. It also highlights how these investments can turn into a nightmare.
On many levels, after all, it is understandable why pension holders invest in schemes like Green Oil Plantations. They want as much money as possible in their pension when they retire and achieving this in a way that helps to protect the environment is highly attractive.
However, with the Green Oil Plantations scheme, like many other sustainability schemes, most people lost their entire investment.
It's important, therefore, to understand what happened to Green Oil Plantations to get a better understanding of how such schemes can look so good but then go so terribly wrong.
What Was the Green Oil Plantations Investment Scheme?
The aim of the Green Oil Plantations scheme was to fund Millettia tree plantations in Australia. Millettia trees produce an oil that can be turned into biofuel to power agricultural machinery.
Investors were told the plan was to plant and manage the Millettia trees. They would then be harvested two years after being planted and the oil would be extracted and sold. This would produce profits that would generate a return on their investment.
What Went Wrong?
The story of Green Oil Plantations starts in 2010 when the company was formed. Between then and the start of 2013, the salespeople and financial advisors encouraged people to transfer their pension into a SIPP and invest it in the Green Oil Plantations scheme. The minimum investment was £10,000.
More than 1,100 people invested a total of £24 million. They were sold the investment product by salespeople and financial advisors who took commissions of up to 15 percent.
Things started to go wrong very quickly, though. By early 2013, the company discovered the predicted oil yields from the trees were not going to materialise. This led to the company going bust, leaving investors with nothing.
The major problem with the Green Oil Plantations scheme was the fact it was an unregulated investment. This means it doesn’t have the same level of protection as a scheme regulated by the Financial Conduct Authority.
As a result, many investors of sustainability schemes like Green Oil Plantations face the prospect of never seeing any of their money again.
What about the mis-selling aspect, however? This is important as there is a duty on those selling unregulated investment products to only offer them to people with significant investment experience. Most pension holders looking to transfer to a SIPP do not fall into this category.
This means they do not fully understand the risks perfectly illustrated by the collapse of Green Oil Plantations and similar schemes. If you think this applies to you and you have lost money on a SIPP investment, particularly one that included a sustainability pitch, you should get expert advice today.