Is the Self Invested Pension bubble about to burst and could that start with a green oil investment?

by Chris Mansfield · 20 comments

Green oil investment and high risk SIPP

Many people have heard me speak of the
next financial bubble to burst which,
in my opinion, will be that of the self
invested personal pension (SIPP)….

and it appears it may have started with
a green oil investment.

There has been a sudden surge of activity
from HMRC and the Serious Fraud Office
in connection with large amounts of pension monies pouring into such a product.

It is understood that one FSA regulated
company may have been investing up to
£2 million from people’s pensions….per week,

and in doing so may have exploited some holes
in the system.

This may explain why their web presence
has significantly reduced of late.

I hate to say it but I saw this coming

For some years now, we have seen an increasing
popularity of SIPPs with the general public.

This appeal has largely been due to the
availability of potentially high return
investments when compared with run of the mill
pension funds.

My experience as an IFA for many years
made it very clear to me that the average 
man on the street is cautious by nature when
it comes to investing in his or her pension.

Lately, I’ve observed that it all seems
to have changed, in that the same man is now
being persuaded to take high levels of
risk with their hard earned pension funds
and with little or no proper financial
advice.

In my opinion a sudden swing to high
levels of pension funds being poured
into high risk investments is questionable
to say the least.

It seems that every conceivable commodity
is being shaped into a SIPP product and
every man and his dog is able to sell
these products because they’re unregulated.

HMRC have started looking into ‘pension
busting’ where the concern is that, with
the increasing popularity of SIPPs, some
less than scrupulous sales men and women have
been extracting significant volumes of cash
from peoples pension funds, by persuading the
ill advised public to invest in extremely
high risk investments.

How the scandal started

I understand that a disgruntled employee
happened to draw the attention of the HMRC
to one particular company selling a ‘green oil
investment’ amongst other things.

This ‘investment’ structure commonly involves
the acquisition of land, very often in
locations such as South East Asia, followed
by the plantation of oil producing plants
which when harvested should produce
eco-friendly oil.

The sale of that oil is supposed to
produce a yield or profit for the investor.

However it would appear that on this
occasion HMRC has uncovered this
particular green oil investment, which has
attracted millions from people’s pensions,
which seems to have disappeared.

It is alleged that a large trust company
in the USA were commissioned to acquire a
plot of land on which such a plantation was
to be developed.

But it would appear that the land has so far
not been acquired and consequently nothing has
been planted.

This discovery resulted in the Serious
Fraud Office being notified who, upon further
investigation, have taken Sustainable
Agroenergy Plc and Sustainable Wealth
Investments Uk Ltd to Southwark Crown Court
and obtained company and personal bank freezing
orders as well as appointing receivers for both
companies.

What made this particular investment so popular
for the salesmen?

Well the information I’ve received suggests that
the price of this particular product, when compared
to its counterparts, was comparatively high due to
an increased level of commission being paid, the
source of which ultimately was each individuals
pension fund.

So what does this mean to those investors?

Well it will probably be a long wait in a long queue
to peck at the remains once the receivers and other
creditors have taken their share of anything they
find.

The people with the lowest amount in their pensions
are going to be the ones at the back of the queue and
ironically these are the ones who needed the money
more than anyone else.

This isn’t to say that all green oil investment
is unsafe or unethical, but it would be fair to say
that my company has not yet come across one of
them that is not high risk.

Pension investors should not ignore the opportunities
that could be provided by utilising a SIPP, but my
words of caution are to take proper independent
advice, even though the products are non regulated,
to ensure that this path and specific investment for
your pension is appropriate and matches your own risk
profile.

I will keep you updated as the situation develops.

UPDATED 22 March 2012

I now understand that attempts by a few investors to get their money back drew the attention of the HMRC.

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{ 20 comments… read them below or add one }

Pauline Murray March 30, 2012 at 10:03 am

Thanks for the update. I am still not aware how something like this can even happen, when IF are meant to do there due diligence.

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Chris Mansfield March 30, 2012 at 10:34 am

I agree Pauline, the problem here is who is actually responsible for the advice and the due diligence. Technically speaking it is the pension provider who should do the due diligence on the product as it is they who have to approve it as being suitable for a SIPP. However, as I said in my blog, the fact that a product qualifies for a SIPP under HMRC rules does not make it a safe investment, it simply means that it meets certain tax criteria. Unfortunately the perception of the general public is that a SIPPable product is a safe product and this makes it a lot easier to sell. I am at a loss to know how Financial Advisers gets around compliance when selling a high risk product to a low risk client other than possibly using the execution only route where the client effectively takes responsibility for their own decisions. However, if this is the case, this will also come into question as it was always my understanding that this was intended for high net worth clients only. The main focus of my blog was aimed at this issue rather than the green oil product itself, in my opinion there are £millions being poured out of peoples pensions into high risk investments that are inappropriate for the clients and I can’t believe that there has been a sudden massive swing from cautious to adventurous. To me it seems inevitable that this will soon come under very close scrutiny by the FSA and the HMRC.

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Paul Smith April 5, 2012 at 3:29 pm

I have been offered investment through a SIPP in Green Oil Plantations which involves leasing Land in Australia. The returns are fantastic – a 40,000 investment returns 83,600 in 8 years. The company has a very fancy website and the investment is SIPP “approved”

What do you think

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George Roberts July 14, 2012 at 1:53 pm

My company is a supplier for Green Oil Plantations in Australia and have not been been paid for work carried out over 6 months ago. This is a common theme as I have spoken to other suppliers who are in the same predicament. They may be paying investors but certainly not all their bills. I would strongly suggest you avoid this dodgy company.

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Chris Mansfield April 5, 2012 at 9:45 pm

Hi Paul
I would need to see the details of the specific investment. Just for clarity, I wouldn’t want anyone to think that all alternative investments are bad, but qualifying for a SIPP doesn’t make them safe. If you would like to email me the details of the investment together with a contact number to c.mansfield@davenport-wealth.com I will gladly take a look and get back to you.

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Simon Barratt April 8, 2012 at 1:26 pm

I think you need to make it clear here that it is not the investment that has failed, but instead fraud has occurred with regards to the client’s money. This could have happened with any investment, stock market linked or not, where fund managers and product providers have not done what they have said they would do. Enron is a good example of this.
With regards to Green Oil Plantations and Paul Smith’s comment; clients who have invested within this vehicle are receiving their payments and land has been purchased. Any concerns with regards to this and I would suggest you contact Green Oil Plantations directly and ask for proof.
The SIPP itself is similar to the 401k in America which is now the most successful method of pension provision in the states, if its work over there then it will work over here providing there is no fraud.
To clarify, fraud is not a sign of a bad investment but the result of a dishonest broker/product provider.

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Linda Parker June 16, 2012 at 7:58 pm

If an investors attitude to risk is high they could have picked a CFDs or a specialist Investment Trust. It seems very fool hardy to make and investment that is the other side of the world. As they say a fool and his money.
As Chris mentions a couple of post back. Just because it’s a SIPP doesn’t make them safe.

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Huw Price June 18, 2012 at 2:15 pm

Chris,

I totally agree with Simon. SIPP’s are not a bubble or a scandal, the fact that they may be susceptible to bad practice, over emphasis of HMRC sippability or as would appear to be the case you identify fraud reflects on the practitioners and not the wrapper. I suspect any SIPP provider that purchased the investment you mention will be looking at their fiduciary liability, as should the adviser. I suspect this is not over and may invoke the newly acquired powers of the FSA to ban certain products/investments. Caveat Emptor does provide opportunity but it does rely on those that take a fee to either provide advice or Fiduciary oversight are fit and able to do their job.

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Chris Mansfield June 18, 2012 at 3:25 pm

Hi Huw, you’re absolutely right and that is exactly what I was trying to get across. My tongue in cheek comment that there seems to have been a large swing from cautious to adventurous was pointed at the sales people who use the fact that a product may qualify for a SIPP to convince investors that the product they’re selling is safe. The “bubble” which I believe is about to burst is the mass use of the SIPP as a vehicle for all and sundry. Appropriate use of a SIPP for the right client and the right product must be a serious consideration when faced with current economics and poor returns on savings. I have been checking out the due diligence on Green Oil Plantations which was kindly sent to me by Guy Tolhurst of Intelligent Partnership and it’s fair to say that for the right client I would be happy to include this product as part of a structured portfolio within a SIPP wrapper. Many thanks for all the responses so far. Hopefully together we can do something towards making the world a slightly safer place for investors looking for decent returns on their money.

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Steve F September 5, 2012 at 12:58 am

I live in Asia and I am seeing plantation investments being offered to Asian investors with a credibility stamp of “authorised for UK pensions” . These are from the same people that used to offer UK Land Banking plots. The web of agents, marketing companies and offshore investment groups makes it impossible to determine where your money actually is and which jurisdiction you would sue under should you need to get it back. My sense is most of these investments are scams although some of the people involved with them genuinely believe they are selling valid investment products. Even if they aren’t scams today the lack of regulation means that a staff change tomorrow could siphon off all your money. Search for plantation scams in Google and see many teak scams that have never matured.

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Caroline Hodson November 26, 2012 at 9:59 am

Do you not think that the biggest problem is that IFA’s are supposed to be INDEPENDENT and should be able to advise on anything that their clients may be interested in or make them aware of the legitimate non regulated investments available? Instead they are QUITE RIGHTLY paranoid about the FSA and their clients suing if anything goes wrong? If IFA’s were able to do their due diligence for their clients and advise freely on any investments and pension “wrappers” clients would at least be getting some kind of real help before they made a decision.

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Chris Mansfield November 28, 2012 at 4:35 pm

Hi Caroline, I’m hearing you load and clear! I don’t think it’s the biggest problem but it’s certainly right up there. In my view the main issue is the fact that there is no form of regulation or code of conduct to comply with, and as such anyone can sell alternative investments, many without any care or consideration for the investor or their money, and yet the qualified Financial Advisor, who probably could advise correctly, isn’t allowed to because of the unregulated nature of these investments. I’m about to write an article for the Business edition of my local newspaper which raises the question of whether an individual is regarded as “sophisticated” or not. If someone is considered “sophisticated” in the eyes of the powers that be, they are apparently able to make their own investment decisions, or is it simply that someone has deemed that they can afford to lose their money? Now this may or may not be the case but in the meantime what about the people who are not deemed as being “sophisticated”? These people could really do with being given access to some of the strong investments around the World, because they need their money to work harder than it is in the UK, but they’re unable to get appropriate advice from qualified people for the reasons you’ve given. However, I believe all this could change for the better very soon. I’m led to believe that with the disbanding of the FSA will come two new regulatory bodies, one of which will be the Financial Conduct Authority. It’s suggested that this body will be introducing regulation on the conduct of selling an investment product whether the product itself is regulated or not. If this is the case then it will hopefully put an end to so much of the mis selling and misleading marketing of alternative investments including overseas property. This is what I’ve been striving for since setting my company up 5 years ago. I was in financial services for nearly 20 years, the last 9 of which as an IFA, before selling my practice in order to focus on providing a genuine, good quality service to investors seeking straight, honest advice about overseas property investments. My company operates in exactly the same way as an IFA would but we simply rely upon our own ethics and morals to “regulate” ourselves to ensure that our investors get appropriate guidance on suitable products, and if we believe that overseas investments are unsuitable then we refer them to more appropriate products using my previous experience in the conventional regulated World. If what I’ve said and stand for strikes a chord with you, it would be great to chat.

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Steven Fouldstuff February 7, 2013 at 10:34 pm

You may be interested to know that Green Oil Plantations have been told to stop raising money by their auditors until they can demonstrate the returns they claim to be able to make can be proven. The “super-seed” much derided by leading industry experts has failed to deliver.
You will also know that Guy Tolhurst of Intelligent Partnership not only held the master distribution agreement for this product, but also sat behind the SIPP Platform who provided the DD on this and many other of these types of product for SIPP companies.
IP and SIPP Platform were provided with considerable evidence by an independent DD provider during the summer that the Green Oil was no more than an experimental growth programme and should not be offered as an income investment however chose to ignore detailed expert analysis.

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Paul Smith April 16, 2013 at 1:42 pm

I see Green Oil Plantations Limited have gone into Administration – 15 April 2013
What a surprise!

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Nicola Henshall April 23, 2013 at 8:39 pm

Hi,
Just read your article and it has got me concerned. My Dad has invested some money in a Green Oil Plantation and has received an email today stating the company has gone in to administration. After reading this I’m thinking this could all just be a big scam! Any help would be most welcome as my Dad and myself are not familiar with how to progress if he has been scammed.
Kind regards
Nicola

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SAQIB HUSSAIN April 24, 2013 at 10:04 am

How would you go about claiming back any money invested and the company has had a bad harvest and now is in the process of being taken over by a recevership company.

Who could you contact to report this to and what would be the standard procedure.

All advise is much appreciated

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Chris Mansfield April 24, 2013 at 2:00 pm

Unfortunately this seems to be happening more and more lately and I wish I could offer more assistance. Anyone who has invested in these products and is concerned about the potential losses should contact the administrators/receivers to register their position as soon as possible. I wish you all the best of luck for a positive outcome.

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David Johnston April 26, 2013 at 4:54 am

I believe the problem is not so much the SIPP itself, more so the salesman who sells such products finding it easier to encourage people to switch their pension into a SIPP and through that invest into some strange scheme, rather than using cash. If people don’t get the benifit for another 15/20 years, perhaps it doesn’t seem like real money?

I have heard many sales pitches of late, from Rice in Sierra Leone to some metal no one has ever heard of in the DRC. All I have learnt is don’t register any interest in ‘alternative investments’ or suddenly your phone rings an awful lot with various people trying to steal your money.

One SIPP company that keeps cropping up is called ‘Stadia Trustees’, they seem to be the company of choice for these investments. Does anyone have any info on them????

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TSL Legal May 10, 2013 at 1:51 pm

I’m not sure if this assists any of the contributors, but we have been asked to look into this scheme by investors looking to get their money back.Unfortunately we have a whole portfolio of clients who have been misled on this type of investment, in the UK , America, South America , Caribbean, the list goes on. Our lawyers are regrettably very experienced with these cases now, which highlights the need for tougher regulation and a clamp down on the mis-selling by the so called professionals who are happy to recommend with little or no due diligence.
If you have been affected by this or any similar scheme, drop me a line and we may be able to assist with getting your investment returned tsllegal@tslconsultancy.com
thanks Brian

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Chris Mansfield May 10, 2013 at 2:29 pm

I need to point out that I have approved the above posting in good faith in the hope that it is genuinely intended to help people and not simply to advertise.

I have never had any dealings with the firm however and therefore cannot be seen to recommend their services.

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