I’ve lost my pension pot…
The BBC has made an excellent program building on last year’s exposure of problems at Dolphin Capital. At that time alarm bells were beginning to ring for thousands of UK investors in Dolphin’s bonds. The bonds had been marketed to people with pensions and savings in the UK by direct marketing from abroad, as well as authorised and unauthorized advisers in the UK. The 2019 You and Yours program was promoted on this blog in an article I called Grand Designs.
The point of promoting the problem was to alert consumers to the perils of investing in something as intrinsically attractive as these Dolphin bonds; they were marketed to a template based on four hooks which are the template for most unreliable investment schemes
1) Plausibility. The Dolphin investment sounded plausible – it’s German, therefore reliable. It’s property, therefore tangible.
2) Tax related – always a winner. Often mask the fact that the investment itself isn’t sound – but the fabulous tax breaks make it sound like it is
3) High digit returns promise – 10% plus should sound an alarm bell to everyone but the financially vulnerable
and what wasn’t disclosed to investors but which was key to introducers
4) High Commissions – which incentivise people to sell – and to people high risk investments aren’t suitable for.
It was almost possible for an introducer to take a 20% commission and consider he/she had done the due diligence, in some cases introducers were flown to Berlin to see Dolphin Capital’s investments. It should be no surprise that marketing focused on countries (Britain, Ireland, Singapore and Japan) where many people are obsessed by property investment.
Somewhere in Germany
The latest You and Yours makes it plain that while Dolphin started off being open about its investments, those who have invested in the past few years have been given no idea where their money has gone and much of the program was spent on Dolphin sites which had not been developed, had been over-mortgaged or in one case, was claimed to be a Dolphin site but turned out never to have been purchased at all. While early investments may have been in prime sites (in Berlin for instance), latterly investor’s money had been spent on property in the back of beyond , some of it never even visited by Dolphin’s management. In short – what was sold as geographically sound, was anything but.
Geography is also important here, because though it is estimated that over 6,000 people in the UK bought into Dolphin bonds, it looks like most of what was going on fell outside the FCA’s “regulatory perimeter”. Consequently most investors will have no recourse to the Financial Services Compensation Scheme and will have to stand in the queue of unsecured creditors awaiting the liquidation of Dolphin’s assets following the bankruptcy of Dolphin Capital.
As with the recent scandals surrounding the regulation of LCF and Connaught investments and the mis-selling of pension transfers, the FCA have been slow to the case. The first notice on its website was posted in October of this year
This despite the You and Yours program in May 2019 and the growing protestations of investors that money promised was not being returned to them. The FCA’s statement confirms that most of what was going on was not on its watch but that it is liasing with the Financial Ombudsman and the Financial Services Compensation Scheme as to what can be done for those who invested through FCA authorised SIPPs and other pension products.
This has prompted former FCA director and consumer champion Mick McAteer to tweet
V interesting #youandyours on investment scams
We need to have a honest, frank debate now post Brexit on how to protect consumers from unregulated investments.
Good to hear @henryhtapper on the prog https://t.co/I9byfNLNJL [1/n]
— Mick McAteer (@MickMcAteer) December 28, 2020
I agree with Mick, we need our regulators to find a way to pick up on the tsunami before and not after the wave has broken. This wave is likely to be bigger even than LCF and Connaught and more destructive – it is thought that more than £1bn of investor’s money may have been lost to Dolphin.
What you should I do if I am a Dolphin investor?
I did act as an adviser to the program and comment at the end of the program. My advice to those people who have money in Dolphin Bonds is to get in the queue (either for FSCS) or for a pay-out from the liquidators now. If you are such a person and want to know what to do next , you can contact the Financial Ombudsman Service either directly or via the Money and Pension Service.
How to complain to the Ombudsman service if the firm you dealt with is still trading
You should immediately contact the financial services firm that you have dealt with (for example, the financial adviser who advised you to invest in the GPG scheme and/or SIPP operator through which the money was invested) and submit a complaint. This means that the firm must take certain actions within certain time limits.
If you are unhappy with the response received from the firm, or do not hear from them within the relevant time period required by the FCA, the Ombudsman service may be able to help. It is a free and easy to use service that settles complaints between consumers and businesses that provide financial services.
But what of those who did not invest via their FCA regulated pension?
The FCA website can only help those who invested through their pension but I have no “regulatory perimeter” – it is important that someone is helping those people termed “cash investors” who did not use their pension money but paid for their bonds directly.
Although the program did not refer to this, I understand that there is likely to be a criminal investigation about what happened to Dolphin investor’s money. If such an investigation finds against Charles Smethurst and the management of what is now the German Property Group, then there may be further avenues for compensation.
But for now the prospects for cash investors are limited.
These people are now being assailed by a number of claims companies , many purporting to have semi-official status. I strongly advise (if you are a cash investor) you are wary of all of them and direct any correspondence to Goerg – the lawyers in charge of the administration
The person to contact is Tim Beyer, whose details are here