It can be difficult – sometimes impossible – to prove that a financial services firm or an independent financial advisor (IFA) has mis-sold investments. This is primarily because the financial sectors are all characterised by degrees of risk. While certain investments are perceived as safe, they are almost guaranteed to display fluctuations or signs of volatility over lengthy periods.
Gold, for example, is considered by many to be the benchmark of a secure investment, acting as a commodity currency that remains stable irrespective of currency fluctuations of political instability. While the price of gold has steadily grown in-line with inflation over the course of decades, extraneous factors have briefly affected its price. Recently the rise of cryptocurrencies caused some concern for gold shareholders, but decentralised currencies are yet to register a significant impact on its cost. If they had upset the monetary balance however, it would have been very difficult for investors to prove they had been mis-sold investments in gold. Innovations, advancements, and unforeseeable changes are just a few of the multitude of factors that can affect stock prices to acceptable degrees of risk valuation.
Risk is an innate factor of the stock market, which is why IFAs and firms are required to perform accurate risk assessments to ascertain a client’s attitude to risk before advising them to invest in a portfolio. This is one of the chief clauses that supports individuals trying to prove they were mis-sold investments.
This article will explore five of the most commonly mis-sold investments, each of which is characterised as a high-risk investment:
1. Alternative Fuels
Touted as an ethical and modern investment, alternative energy sources such as biofuels and ethanols are considered high-risk because the technology, processes, and applications of the product itself are still relatively emergent. They are notoriously linked with mis-sold investments due to the high profile Elysian Fuels scheme that reduced millions of pounds worth of investment to a sum of zero in less than a decade.
Offshore agriculture is an appealing investment for numerous reasons, with investors and pension holders believing it to be an ethically sustainable means of additional income. However, many offshore investment plans are not regulated by the Financial Conduct Authority (FCA). Well-publicised cases of mis-sold investments in farmland or forest plantations have resulted in massive losses for policy holders, who may struggle to claim compensation against unregulated organisations.
3. Offshore Property Development
Offshore property is similarly associated with mis-sold investments due to the prevalence of unregulated schemes. Holiday homes, luxury apartments, and retail complexes are just a few examples of the sort of glamorous investment that is marketed with good returns, but in reality, is much higher risk than advertised.
4. Parking Spaces
Increasing urbanisation and population densities has made it easy for developers to exaggerate the demand for public amenities such as car parks. Investors that bought into this superficially simple mathematics have found themselves stuck with illiquid mis-sold investments.
5. Storage Units
There is a similar pattern of individuals being advised to invest in storage units / pods, with pension holders in particular being encouraged to transfer their pensions into self-invested personal pension (SIPP) plans with storage unit investments. Store First is an infamous example where pension-holders had their retirement savings reduced and often depleted by unprofitable investments in storage units, with plans featuring high penalties and charging structutes.
Mis-Sold Investment Claims from Money and Me Claims
Money and Me Claims is an independent financial claims management company with a detailed understanding of the financial sector and the processes involved in making financial claims. We have demonstrated our expertise time and time again, securing substantial amounts of compensation for clients that were mis-sold investments by IFAs or financial services firms.