Everything You Need to Know About Storage Pod SIPP Investment Claims
3 March, 2018
A 2017 survey undertaken by the Financial Conduct Authority (FCA) revealed that an estimated 15 million people in the UK will retire without any form of pension savings. Based on these figures, at least one third of future retirees will have to rely solely on their state pension to get by in their old age. That’s a paltry £159.55 per week, at best!
As life expectancies increase, and living costs rise alongside, a consistent pension savings program can provide valuable income during retirement years. Setting aside, just a few hundred pounds now, should allow even the most cautious investor to earn a consistent return that comfortably outperforms any savings account.
For many years, aspiring retirees depended upon independent pension providers to handle their vital retirement savings. Unfortunately, the conservative investments made by these pension providers often created significant frustration for savers. After all, if your provider is only willing to make the most risk-adverse decisions, the opportunities for creating a sizeable pension fund when it comes time to retire, become far slimmer.
Enter the SIPP
To address these issues a new government-approved personal pension scheme known as SIPP (Self-Invested Personal Pension) was introduced. While these programs still involved a contact between pension providers and individuals, the actual terms of the contract allowed people to take far greater control over how their money was being invested.
With an SIPP, retirees could put their pension savings into a variety of different investments in hopes of a far more lucrative return. SIPPs were also beneficial from a tax perspective, not only did they provide up to 45% tax relief on any contributions (depending on the level of income), returns on these schemes were also exempted from capital gains taxes and income tax.
But it’s Not All Good News
Despite their promises of wealth, many SIPPS offer a very different reality in practice.
To start with, many of the alternative investments offered through these schemes are highly risky with little solid research to back up their valuations. Often pension providers are paid large sums of money to recommend these dubious products to their unwitting clients.
Additionally, pushy financial advisers regularly make false promises and exert sustained pressure to compel clients to switch their pension savings from traditional schemes to SIPPs. In many of these cases clients aren’t fully informed of the high risk nature of their investments, or the hidden fees associated with the switch. In fact, clients may even end up in an overall worse financial position after taking account of these factors.
Storage Pod Investments
As the name implies, storage pods are self-storage units of varying sizes that are built into a large warehouse structure. People who require extra storage space can rent out these units from their owners on a temporary basis. Seems simple enough right?
For a number of years SIPP-owners have been pushed towards investing in these storage units. In many cases investors were subjected to numerous cold calls from unfamiliar pension providers, and independent financial advisers (IFA) looking to thrust storage pod investments onto them in any way possible. Often these salesmen would use high pressure selling tactics, attractive cash incentives and the promise of consistent, above market average returns to lock unknowing investors into long-term leases on storage units.
Why Storage Pod Investments Might Not Be Worth the Hassle
However, these claims just don’t stand up to scrutiny when closely examined.
- It’s important to note that investors only hold the rights to the unity itself, rather than the land it sits on. So if the actual landowner decides to repossess the property or if the unit is simply abandoned then the possibilities for earning any return whatsoever are drastically reduced.
- Unless your pod is already earning a consistent rental income it’s highly unlikely that you’ll make back your investment if you decide to resell the unit.
- While many of these lease agreements do contain provisions which allow investors to back out of their contract, these agreements are often highly complex with specific terms that may provide the investor with no recourse in practice.
- Investors will also be required to pay insurance on their unit.
- Although many storage pod leases do promise a guaranteed rate of return on units, these promised sums will rarely if ever outstrip the actual cost of investment over the period of the lease.
- If you’ve already bought into one of these units then you may be completely unaware of just how poorly your investment is doing. Many SIPP providers have been shown to present false return statements to their clients to prevent them from walking away.
Serious Fraud Office (SFO) Investigation
In light of these worrying issues, the SFO launched a wide-ranging investigation into the sale of storage pod investments last year. This investigation covered pension schemes such as the Capita Oak Pension and Henley Retirement Benefit plan, as well as all SIPPs. According to investigators, mis-sold storage pod may have put up to £120 million pounds worth of investors’ money at risk. According to insiders at other pension companies these losses may only represent the tip of the iceberg, when it comes to SIPP investments.
At the centre of these claims is a company called Store First, the premier self-storage provider in the UK. The majority of units sold through SIPPs were owned by Store First. Recently the Self-Storage Association of the UK (SSA) released guidance warning investors against some of the misleading advice being provided to potential investors by Store First. The guidance shows a number of official sources which prove that Store First was paying extensive commissions to IFAs and SIPP providers in exchange for Store First leases.
You can find our sources at the end of this post.
The FSCS are Now Paying out Claims on Mis-Sold SIPPs
Following this investigation, the Financial Services Compensation Scheme (FSCS) received a number of claims against SIPP providers in relation to due diligence failings and improper conduct. The FSCS is a last resort statutory fund, established to provide protection to consumers that have lost their investments due to negligent advice or mis-sold financial products.
In the case of Storage Pod investments, many of the companies responsible for the sale of these products have been liquidated or have claimed a lack of assets for reimbursement. While the FSCS has been following up on claims made against these SIPP providers since 2013, most of these cases have previously been classified as complex; which meant that no guarantee of quick conclusion or compensation could be made.
However, the FSCS has now made the decision to pay out many of these claims, and has pledged to raise additional funds for the rising number of claims expected in the coming months. To cover these costs, the FSCS has imposed a £163.3 million levy on many of the IFAs involved in selling these investments. Recently the organization published an extensive list of IFAs declared to be in default over mis-sold SIPP claims.
- Archer Wealth Management CL&P
- Jackson Francis
- Moneywise Financial Advisers
- Shah Wealth Management
- Douglas Baillie
This new position offers victims of mis-sold SIPPs the perfect opportunity to recoup some or all of the money they’ve lose due to these high risk investments.
Are You the Victim of a Missold Storage Pod Investment?
You May Be Entitled To Compensation.
At Wentworth Andrews we employ a team of finance specialists that have extensive expertise in fighting and winning missold SIPP claims. Over the years we’ve recovered millions in lost investments for our clients.
If you think that your hard-earned retirement savings might be at risk, don’t take the chance of writing off your losses, contact us so we can get you started on the road to recovery today!
Just because your investment didn’t make a loss, doesn’t mean that you weren’t sold an unsuitable investment. The judgment on suitability is based on the promises you were made, versus the actual risks involved in the investment.