Investors in ‘luxury’ Cape Verde hotel development project The Resort Group have been sent questionnaires by the Financial Conduct Authority (FCA) asking for information on their investment.
Founded in 2007, The Resort Group has four completed hotel projects in the island of Cape Verde, off the coast of North West Africa, and employs over 2,000 people, according to its website.
The Gibraltar-headquartered company, which says investments in it are made through IFAs, is not FCA regulated.
New Model Adviser® understands the enquiries being made by the FCA are being carried out as part of its unauthorised business division and are looking at whether any regulated activity was being carried out without authorisation.
Although the regulator is charged with overseeing the behaviour of regulated firms, it can intervene if it suspects an unregulated company has stepped into activities which it must be regulated to carry out.
At the launch of its ‘Mission’ last October the FCA said it would increase its focus on unregulated activities, commenting that the line between unregulated and regulated activities is often ‘blurred’ and indicated it will do more to step in on unregulated activity.
The Resort Group project received media attention in 2014 when the reported celebrities including Kerry Katona and Tinie Tempah were 'jetted in' to the opening of one of The Resort Group’s hotels.
In 2016 an investigation by the BBC’s Panorama went undercover at a call centre owned by The Resort Group and uncovered sales practices used to encourage people to invest their pension in the development.
New Model Adviser® has now learned that in May of this year the FCA sent letters to investors in the scheme asking questions about the Resort Group.
One letter seen by New Model Adviser® said: ‘The FCA is conducting enquiries into The Resort Group Plc and others in relation to suspected breaches of the Financial Services and Markets Act 2000.’
In the letter the FCA said it was contacting the investor as it believed they had invested in the Resort Group ‘through a review and transfer of your pension’.
Investors are being asked to complete a questionnaire, referred to in the letter, to provide the regulator with more information about the Resort Group.
‘You will note that in the questionnaire there is a request to provide the FCA with any relevant documentation,’ the letter said.
Both the Resort Group and the FCA declined to comment.
The Resort Group investment has been found in DFM portfolios, with Greyfriars Asset Management’s Portfolio Six previously holding Resort Group bonds targeting interest payments of 7%. Greyfriars agreed with the FCA to stop taking new investments last November.
On its website, the hotel development says: ‘All investments into The Resort Group Plc are made through fully regulated routes via third party introducers and IFAs regulated by the FCA, typically using model investment portfolios from FCA regulated discretionary fund managers (DFMs).’
In last year’s Panorama documentary secret filming showed introducer Lifestyle Connections was securing free pension reviews for sister company First Review. One Lifestyle Connections employee told a BBC reporter the goal of the firm is to get ‘everyone to invest in Cape Verde’.
Both of these introducers were owned by The Resort Group.
At a filmed appointment, a pension consultant at First Review gave sales information about setting up a Sipp and investments in The Resort Group.
Last June the BBC asked the Resort Group, for a statement. The Resort Group told Panorama in February last year it decided that Lifestyle Connections and First Review would stop taking new business after 30 June 2016.
However a New Model Adviser® investigation in May found six employees and the director from First Review had moved to a newly formed pension introducer called Pension Connect which was securing leads for an FCA-regulated IFA, Asset Independent Financial Advisors.
At the time a spokesman from The Resort Group said: ‘No directors of any business associated with The Resort Group have had any involvement in establishing or operating Pension Connect.’
When contacted Pension Connect was unavailable for comment.