Ethical Forestry bills itself as a sustainable timber management company that provides ethically-sourced and harvested timber from plantations in Costa Rica. Many UK investors were attracted to the company’s core principles of sustainability and community support, and between the years 2007 – 2015, invested a total sum of around £50 million in the scheme. This investment was handled by the Dorset-based scheme Ethical Forestry Limited and associated companies, which subsequently went into liquidation in 2016.After it transpired that the investment scheme had paid its directors significant sums in subsequent years, the scheme was subjected to a probe from the Serious Fraud Office (SFO), leaving many investors in financial limbo. A payment of £10.3 million was made to Ethical Forestry Limited directors in 2013, preceding a company-wide revenue drop of approximately £16 million for the financial year 2013 – 2014.
The Financial Conduct Authority (FCA) began investigating the group in 2016 to determine if it had been operating outside of its authorisation parameters. This represented a significantly increased financial risk to those that had lost out as a result of the firm’s potential malpractice, reducing the likelihood of support from the Financial Ombudsman Service (FOS).
It further transpired that the Ethical Forestry scheme used unregulated introducers to promote investment via cash injections or through self-invested personal pension (SIPP) transfers. These introducers include Avacade, which is currently under investigation by the FCA.
Determining potential compensation sums has been complicated for officials of the Financial Services Compensation Scheme (FSCS), as the Ethical Forestry plantation is still operating with as little as a 20% share in Costa Rica. The remaining 80% is owned by now-liquidated UK firms. SIPP providers that encouraged investments in Ethical Forestry have argued that the value of these investments remains at ‘book value’, or the initial investment value, due to the technicality that the company continues to trade. Based on alternative valuations from other SIPP providers, the FSCS has declared Ethical Forestry investments as uncertain, and as such is prepared to pay out compensation.
In March 2017, the SFO executed search warrants at several addresses, initialising its investigation into several independent financial advice (IFA) firms – primarily Ethical Forestry Limited. This criminal investigation has offered a lifeline to many investors who were initially subject to a gruelling wait to discover what would happen to their investment sums and retirement savings. The SFO outlined the criteria for investors who may be able to seek compensation from the FSCS:
- If their investment was via a SIPP;
- They were advised to transfer their savings by a defaulted IFA;
- If that IFA was registered with the FCA.
Investment Claims from Money and Me Claims
The landscape of financial investments may seem deliberately difficult to navigate at times, with multiple financial bodies and complex terminology determining if you have a right to your own money. Victims of fraudulent financial selling, or mis-selling of investments in illiquid schemes such as Ethical Forestry are entitled to informed and dedicated representation, to reduce the financial and emotional strain of making a financial claim.
Money and Me Claims is a professional financial claims manager with demonstrable experience achieving substantial compensation for victims of financial malpractice. If you believe you have been involved in the Ethical Forestry investment scandal and would like to seek compensation, please do not hesitate to contact us.
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