A steelworker with no investment experience has been persuaded to invest his life savings into an unregulated German property bond, courtesy of collapsed IFA Active Wealth.
Mike Pickett was one of a number of British Steel Pension Scheme members who became clients of Active Wealth following a meeting organised by unregulated introducer Celtic Wealth.
Like many others, he was convinced to transfer his safeguarded pension funds out of the scheme and into a Sipp which found its way to Gallium Fund Solutions. He says he was unaware of the associated 5% exit penalty to withdraw money from Gallium.
But Pickett’s case is unique in that along with transferring his pension, he also ended up investing £35,000 of his personal savings into Dolphin Trust GmbH, which specialises in the development of German-listed buildings and promises 10% return on investment.
However, the bonds only pay out at maturity, after two years, and Dolphin Trust is not regulated by the Financial Conduct Authority (FCA), none of which Pickett understood when he invested.
He told New Model Adviser®: ‘When I found out about all this just before Christmas, it absolutely ruined our family’s Christmas. That’s not being melodramatic. I was worried to death that we were going to lose what I’ve got to live on for the rest of my life, by being poorly advised.’
Active Wealth was the first firm to surrender its pension transfer permissions following FCA intervention in relation to advice given to steelworkers.
There is a dispute regarding how Pickett came to invest in the scheme.
Pickett claims to have spoken to Active Wealth adviser Andrew Deeney following the presentation to steelworkers by Celtic Wealth, and says he was visited at his home shortly thereafter by Deeney and a representative of Celtic Wealth. He had three meetings with Active Wealth in total, two of which he said were with Deeney.
Pickett also said he was unaware that the product was aimed at sophisticated and qualified investors.
Dolphin Trust’s website states: ‘Institutional or accredited investors can use selected instruments to invest in the initial phase of project financing or in the overall development of the projects and their acquisition.’
Deeney is now the sole director and shareholder of regulated IFA firm Fidelis Wealth Management, which bought the client bank and good will of Active Wealth following its recent liquidation. He denies all involvement in promoting the unregulated investment.
A statement from Fidelis confirmed that Pickett was visited by Active Wealth three times between 7 June and 18 July 2017, but added: ‘The advice in relation to this investment was given by Active Wealth and Andrew Deeney was asked to visit the client to collect signed documentation that had been left at the previous meeting.
‘At no point was Andrew Deeney ever involved in giving advice in relation to this product with any client of Active Wealth.’
New Model Adviser® has seen a letter Pickett received from Active Wealth in June 2017, headed ‘RE: Dolphin Trust Expression of Interest’, which bears Deeney’s name and signature.
It states: ‘With reference to the above and further to our meeting yesterday, we have enclosed a further form that needs a signature from you.
‘Can you please enter your bank details, sign where indicated and return to us in the envelope provided.’
Pickett claims: ‘Andrew Deeney was the one who made me aware of Dolphin Trust, and he and Liam Powell from Celtic Wealth handled it all. I only met (Active Wealth director) Darren Reynolds once.
‘I was under the impression that the dividends would be paid monthly, but when I got hold of Dolphin, they told me I had signed for end of term payments. I’m now locked into that for two years before I can have access to the money. I’ve been dragged through so much by now that I’m starting to believe nobody any more.’