The scams to watch out for

Professional Adviser seeks out the investment scams lurking below the radar, pouncing on unsuspecting consumers.

As long as there have been good businesses out there trying to help clients invest and save for the future, less scrupulous firms have sought to exploit their search for improbable returns.

In a recent leaflet on investment scams for consumers, the Financial Services Authority (FSA) highlighted land-banking, carbon credits and fine wines as the areas they might want to look out for.

However, there are plenty more risky opportunities out there to tempt both clients and advisers, which have not garnered as much attention.

Professional Adviser presents a few more you may want to add to your watch list. In all cases, there is of course the possibility that investors could make money, but advisers and experts have already told us they are worried.

Rare earth metals

Making its way from across the Atlantic, rare earth metal investments have been taking advantage of reports about the demand for obscure substances such as dysprosium and lanthanum.

Professional Adviser understands many ‘traders’ who had been dealing with carbon credits have now moved on to this area, once again relying on cold-calling.

Marketing materials for the products claim the rare earth metals “outperform gold” and talk of some of the metals having risen in price by 1500% during the past 12 months.

Jatropha Oil

A number of firms selling investments in jatropha plantations, promising returns from the sale of the oil produced from them, have already been shut down, yet there has been little coverage of them in the national media and only cursory warnings from the FSA.

These schemes have exploited the desire for green investments, with buzzwords such as ‘sustainability’. Worryingly, many consumers lured by them have invested in SIPPs and, lured by commission, plenty of advisers have also got caught up.

Pension liberation

It is easy to see why it might be an attractive option: instead of having to wait years, get all your money out of your pensions in one go. In recent years, that’s what pension liberation scams have claimed to do, claiming to use offshore loopholes to help consumers unlock their savings.

Unfortunately, they come along with significant charges and often leave clients with hefty tax bills. Crimestoppers and The Pensions Regulator have been among those to issue warnings, but judging by the adverts on internet search engines, there are plenty of firms still offering them.

Burial plots

It may be among the more macabre ways of making money, but investing in burial plots has recently been touted as a way of taking advantage of rising populations, cost of land and council budget cuts.

Although there have so far been no reports of investor losses or regulator concern, the promises of returns of 42% in two years have raised suspicions.

Professional Adviser seeks out the investment scams lurking below the radar, pouncing on unsuspecting consumers.

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Pension liberation

It is easy to see why it might be an attractive option: instead of having to wait years, get all your money out of your pensions in one go. In recent years, that’s what pension liberation scams have claimed to do, claiming to use offshore loopholes to help consumers unlock their savings.

Unfortunately, they come along with significant charges and often leave clients with hefty tax bills. Crimestoppers and The Pensions Regulator have been among those to issue warnings, but judging by the adverts on internet search engines, there are plenty of firms still offering them.

Burial plots

It may be among the more macabre ways of making money, but investing in burial plots has recently been touted as a way of taking advantage of rising populations, cost of land and council budget cuts.

Although there have so far been no reports of investor losses or regulator concern, the promises of returns of 42% in two years have raised suspicions.

 

Older people warned over scams

The Insolvency Service has revealed details of the retail and investment

scams it has clamped down on over the past three years, many of which

were targeting older people.

Between April 2009 and March 2012, it shut down 78 rogue companies, which scammed close to 2,000 investors and raked in over £28m from the public.

Of these, 49 were involved in land-banking activities, four sold wine stocks that did not yield any profits, and 19 sold other forms of investment.

The oldest victims of one of the scams was 92 and the service said the firms behind them were typically cold-calling their targets.

Business minister Norman Lamb said: “These scams are especially bad as they target some of the most vulnerable members in our society.

“Older people have grown up trusting other people. To take advantage of this trust, and then exploit it is both manipulative and deceitful.”




 

Sourced from IFA Online, 21st June 2012.