Cold-Calling, disappearing financial advisers, hurricanes, liquidations and an investigation by the Serious Fraud Office – Ethical Forestry is in trouble.
Thousands may have been mis-sold their Ethical Forestry SIPP investment, often from cold-calls offering free pension reviews and taking unsuitable financial advice. If you invested in Bournemouth-based Ethical Forestry’s Costa Rican plantations through a SIPP pension, you may have been mis-sold and could be able to make a claim.
Get in touch with the team at Spencer Churchill Claims Advice.Get started now
Several financial advisers and the FSCS have been paying out compensation for having been mis-sold Ethical Forestry via SIPPs for a few years.
Then you may have been mis-sold, and you could be able to make a claim for negligent SIPP advice.
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Ethical Forestry was a high-risk and non FCA regulated investment scheme. Ran from Bournemouth with several plantations of Melia trees in Costa Rica, many investors were persuaded to place their pension money into the scheme via a SIPP with the promise of high-returns for retirement.
Billed as a green and ethical investment, glossy brochures not only focused on the idea that investors were doing something good, but also highly profitable with their SIPP pension money.
Investors would pay thousands of pounds for a section of plantation, which would be managed and eventually harvested for timber, boasting estimated 15% returns in some cases!
As a high-risk investment with assets based abroad, it should have only been considered a suitable SIPP investment for certain wealthier people who could afford the risk, and those who understood those risks due to their experience with investing.
Instead, cold-calling marketing companies like Avacade made thousands of calls, helping funnel prospective investors who had little investment experience or incomes to this high-risk investment.
Ethical Forestry didn’t last, first falling into Administration and then liquidation, potentially losing investors tens or even thousands from their pensions.
Thousands received cold-calls about making Ethical Forestry investments, either through transferring into a SIPP: Self Invested Personal Pension, or as a cash investment. These calls came from a number of unregulated introducers and a good handful of financial advisers to get things moving when needed.
For many, this involved taking on a “free pension review”, where all old and frozen pension would be reviewed to see if they could perform better in a different pension scheme. Often, the suggestion was to move to a SIPP and invest in this high-risk investment, despite the individual often being told it was safe.
Depending on the financial adviser, other investments such as high-risk overseas property investments were also recommended in some cases.
On the 1 December 2014, the Bournemouth Echo ran a headline: “Staff told he would be redundant by Christmas as call centre shuts down”.
This referred to the Holdenhurst Road call centre operation on behalf of Ethical Forestry. According to the article, the reason for the shut down was related to “risk management advice” from lawyers. Staff were told they would receive one months wages, and were sent home, which one worker referred to as “devastating”.
But 2016 wasn’t over yet, and in November, Hurricane Otto hit Costa Rica, and the plantations were damaged. A 2017 damage report prepared by Shane Biddlecombe of the administrators at HJS Solutions stated the following damage:
Santa Cristobal Plantation: 47% Demolished, 26% Significant Effects
Santa Rita Farm: 36% red category (70% Destruction), 21% Significant Effects
Chimuria Farm: 33% Significant Effects
Brasilia 1, 2 y 3 farms: 27% Significant Effects
El Encanto Farm: 22% Significant Effects
Santa Cecilia Farm: 12% Significant Effects
News that the HMRC was claiming £21m from the four companies that helped to promote Ethical Forestry added to woes. The FSCS finished 2016 by saying that they estimated that £50million was to be paid out over negligent advice to invest in Ethical Forestry.
On the 8 March 2017, the Serious Fraud Office announced and investigation into the Ethical Forestry group of companies, with Dorset Police executing warrants at 3 related addresses across Poole, Ferndown and Boscombe, at least one of which reportedly involved armed police.
As part of the SFO investigation, a questionnaire was launched for investors to fill in, which asked investors whether they can been approached by companies such as Avacade, Ethical Forestry and Cherish Wealth Management.
2017 also saw the FCA take introducer Avacade to court.
In 2018, The FOS said that at least one SIPP provider (Guinness Mahon) was to send clients compensation over the mis-selling of Ethical Forestry investments.
In May 2019, it was revealed that some directors of Ethical Forestry drew down over £19 million, and after investigation by the Insolvency Service led to some directors receiving 6 year bans from being a Director of any limited company.
Ethical Forestry was always a high-risk investment. Based abroad in an unregulated industry, the FCA was not able to look over it’s shoulder to ensure it was run correctly.
Ultimately, we don’t know what happened to Ethical Forestry to prompt it entering into Insolvency Proceedings (administration) back in December 2015, but we do know that the plantations themselves suffered heavy damage when Hurricane Otto struck them in 2016.
To compound matters, the Serious Fraud Office opened investigations into the group in 2016, with the Proceeds of Crime and International Assistance Department opening a confiscation investigation too. The announcement came after dawn raids and several properties linked to Ethical Forestry and its staff.Get started now
Like with many failed or concerning investments, there have been several Ethical Forestry investor forums run by different parties since trouble began back in 2015.
Some have even been recognised by the Administrators at HJS Solutions.
We don’t yet know if Ethical Forestry had fraudulent elements involved with it or the group of companies it is related to, just that the Serious Fraud Office has been investigating the group since 8 March 2017.
What we do know is that several financial advisers broke FCA rules when they unsuitably advised people to invest in Ethical Forestry through SIPP pensions, and we’ve helped hundreds to make compensation claims relating to these cases.
Avacade was a marketing company that is known to have introduced some people to the Ethical Forestry investment. Not regulated by the FCA, they were not authorised to give Financial Advice.
Avacade itself has been in been in a Creditor’s voluntary liquidation since November 2015.
In some cases, a financial adviser gave advice following Avacade’s introduction.
While Ethical Forestry and many of the marketing companies involved in mis-selling cases are unregulated by the FCA, if you received financial advice as part of a pension transfer to invest in Ethical Forestry, you may be able to claim compensation.
Find out more about mis-sold SIPP claims or fill in one of the forms on this website to receive a call-back from one of our specialist pension claim handlers.
Between 2013 and late 2016, around 3,000 to 3,500 people invested a total of £86 million in Ethical Forestry, primarily through SIPP pensions. Investments seem to generally range from £12,000 to £18,000 for a group of trees.
Many began their investment journey after receiving a cold-call from a marketing company offering a ‘Free Pension Review, often involving some high-pressure sales tactics.
We now know that many of the people who invested in Ethical Forestry were not suitable for such an investment, not being High Net-Worth Individuals or Sophisticated Investors, exposing them to too much risk.
Usually, blame for a mis-sold Ethical Forestry investment rests with the financial adviser, however SIPP providers have rules to follow too, including due diligence.
If you’re not sure if you had a financial adviser, but still invested in Ethical Forestry via a SIPP, you can still get in touch for a FREE initial assessment to see if you can make a claim.
Providers Guinness Mahon and Liberty SIPP are both known to have accepted Ethical Forestry investments in the past.
We know that a payment of £10.3 million was made to the directors of Ethical Forestry in 2013.
The company’s revenue dropped around £16 million the following financial year (2013-2014).
Other sources (accountancydaily.co) say that £19 million was drawn down by the directors.