A BBC documentary has revealed how an unregulated pension introducer received 7% commission on cash investments in a Cape Verde hotel property scheme.
The BBC show Panorama investigated the scheme in an episode dedicated to 'pension rip-offs'.
The scheme was promoted by The Resort Group. It describes itself as a ‘luxury property’ development in Cape Verde and is owned by Rob Jarrett. Before setting up The Resort Group, Jarrett was a financial consultant at Prudential between 1994 and 1995.
The developments received coverage in the press when completed. One article by The Daily Mail reported how celebrities including Kerry Katona and Tinie Tempah ‘were jetted’ to the opening of one of The Resort Group’s hotels in Cape Verde in 2014, with Jarrett also in attendance.
Panorama revealed that The Resort Group also owns a call centre in Derby, Lifestyle Connections, which calls people to get them to see a pension consultant.
Investors were then passed to a pension consultant at First Review Pension Services, also owned by The Resort Group, which provided them with a free pension review.
The person who carried out the review was not a regulated adviser so should not have given a recommendation.
However, secret filming showed the consultant telling a Panorama journalist this his final salary pension scheme was ‘no good’. The unregulated consultant went on to give detailed information about a Sipp transfer with overseas investments in a property fund which claimed to offer 10% interest per year.
The consultant from First Review said that the property fund is made up ‘of a lot of property’ from The Resort Group development and that the consultant was paid on commission by The Resort Group.
The First Review consultant said he was receiving 7% commission on cash investments in The Resort Group.
However, according to The Resort Group all self-employed representatives
earn receive a fixed fee for pension related business that is substantially lower than the 7% quoted for cash business.
One investor, Stuart Dixon, who ended up investing in hotel apartments in The Resort Group, through an introducer firm called Viva Costa International, said that he is struggling to get his pension investment back after his transfer.
Viva Costa said in a statement: ‘Mr Dixon signed a declaration confirming that he understood we do not give advice and we referred him to a licensed adviser.’
Last week the The Pensions Regulator (TPR) released a notice warning people about a scheme, the London Quantum Retirement Benefit Scheme, which contained a number of 'risky and illiquid' investments. TPR has investigated the scheme and' said that £5.8 million of members’ pensions were ‘put at risk’.
Among the investments in the Quantum scheme was The Resort Group. TPR's report said that the property development promoted investments in the scheme through First Review.
‘It appears that some of the introducers had agents working on their behalf. For example, the Resort Group PLC had an agent called First Review, which ran a call centre through which it promoted the scheme to potential members. The introducers received commission for each new member who transferred their pension pot into the scheme,’ TPR said.
TPR added that investment in The Resort Group 'is entirely illiquid. The investment can only be sold upon completion (not due until 31 December 2016, assuming there are no delays in construction). There are concerns as to whether or not a viable secondary market exists.’
Commenting on the TPR findings The Resort Group said: 'Any assertion that the Pensions Regulator ruled that investments in The Resort Group PLC are unsuitable for pension schemes is simply incorrect. The only finding that applied to an investment in The Resort Group was that it was considered to be “illiquid”. This is not strictly true as property can be sold at any time, even before completion, and there is also a secondary market. The real concern of the Pensions Regulator appeared to be that all of the investments made by the particular pensions scheme in question were illiquid and therefore there was not the sort of diversified approach which is preferable from a risk-perspective.'
In response to the documentary, The Resort Group said in a statement that it is looking at the findings of the film.
‘We are grateful to Panorama and are investigating this as a matter of urgency. All investments with the Resort Group are safe and investors have received all investments due. A pension transfer into The Resort Group is not possible without advice from an IFA,’ the statement said.
The Resort Group said Lifestyle Connections and The First Review firms stopped taking new businesses from 30 June.