We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

12% FIXED on investment..?

A company called Harewood Associates is offering a 12% FIXED interest deal - see http://http://www.harewoodassociates.co.uk/fixed_rate_option.html

Few details are given other than it is a property investment. What I can't understand is how they can possibly advertise/offer a fixed rate of return on an investment. Can anyone enlighten me?
«13456

Comments

  • dunstonh
    dunstonh Posts: 117,905 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    edited 5 July 2013 at 10:54AM
    What I can't understand is how they can possibly advertise/offer a fixed rate of return on an investment. Can anyone enlighten me?

    They are not regulated. You tend to find unregulated schemes make all sorts of claims. Some may be true but some would not be or worded with caveats or worse the caveats may not exist at all.

    If that was a regulated scheme, then it would be full of breaches and they couldnt say anything of the sort. For example, it is a risk based scheme with 100% loss of capital possible. Yet it compares itself with cash. At the bottom of the page it says the highest returns with the lowest risk. Being an unregulated scheme where loss of capital is possible then that is not the case. There is not one mention of the potential for capital loss. However, it can say all these things as it is not regulated.

    It isnt an unregulated collective investment scheme but similar (as it requires a collective of people to invest in a single company in which they hold shares). This is what the FCA says on unregulated collective investment schemes:

    Our view is that UCIS are high risk, speculative investments that are unlikely to be suitable for the vast majority of consumers.
    http://www.fca.org.uk/firms/financial-services-products/investments/ucis
    Read the link on that page to Connaught which was an unrelated scheme. Nothing to do with the this company at all but similar in its claims and the way it was promoted. You can see what the regulator saw as faults.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • alanq
    alanq Posts: 4,216 Forumite
    1,000 Posts Combo Breaker
    edited 5 July 2013 at 8:46AM
    Broken link. Try http://www.harewoodassociates.co.uk/fixed_rate_option.html

    Companies can and do offer fixed interest rates. As people who lent money to Co-op Bank have recently discovered such money is at risk if the companies get into financial difficulties. There is no FSCS guarantee for such investments.

    Previous discussion
    https://forums.moneysavingexpert.com/discussion/4387985
  • Vortigern
    Vortigern Posts: 3,274 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Harewood Associates was discussed briefly in January here
  • ericonabike
    ericonabike Posts: 334 Forumite
    Part of the Furniture Combo Breaker
    Thanks all - had missed prev discussion. Wonder if the ASA would be interested though?
  • redbuzzard
    redbuzzard Posts: 718 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    The trouble with SPVs for third party investors is that there are too many ways to limit the upside.

    Who is actually doing the building? (clue - it won't be the SPV) What happens if it goes bust?

    A few years ago I put a small amount of money into a BES company that was similarly structured. It was to buy and refurbish London residential property, then let or sell it. It did this at a time when London prices were rocketing. However, there were a surprising number of connections between the directors of the company I had shares in, and the companies doing the refurbishment, management, valuations, etc.

    We had a lot of trouble and delay getting the money out on exit. We did "OK" in the end, about 8% p.a. return, but we could have got the same without the worry with one of the university accommodation schemes around at the time. And that scheme had a name with a track record behind it.

    With hindsight, we had no chance of making a super-return because the promoters were always going to be able to apply costs to "our" business that enriched them elsewhere.

    That is the best outcome. Worst is that the SPV just goes bust, or runs out of money before the development is finished. The promoters can still make money if they have been involved in other companies providing services to the SPV (such as the company doing the construction). They don't have to be crooks, if they have any sense they will have structured this so they can't lose money.

    Any guarantees from the SPV itself, for example in respect of the 12% fixed return, are not really guarantees at all - just expectations. Presumably it isn't even a loan, or deposit - the SPV "has no borrowings" according to the "key feature" which are full of holes. For example, there is an "option to sell your shares to other shareholders" - is that really an 'option', with a right to put at a predetermined price? I doubt it. Do the fixed interest subscribers rank pari passu with the others? How does that square with "no borrowings"?

    The promoters might well be fine chaps and chappesses who have had a brilliant idea and the best of intentions, but this is a very high risk investment.

    I'd love to know how it works out in due course. They might even get through some successful developments, they are quite small. My guess is that at some point they will come unstuck on a bigger project.
    "Things are never so bad they can't be made worse" - Humphrey Bogart
  • jimjames
    jimjames Posts: 17,933 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Thanks all - had missed prev discussion. Wonder if the ASA would be interested though?

    Unlikely. Even if they were they would say not to do it and the company either ignore or start up on a new name.

    Just because it says something on a website doesn't mean it is true
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Rob_192
    Rob_192 Posts: 289 Forumite
    The words 'bargepole', 'touch' and 'wouldn't' sping to mind in no particular order.
  • robtgossard
    robtgossard Posts: 43 Forumite
    Glad to see you were dubious. Bad economic times are the best times for such scam-schemes to foster.
  • jimjames
    jimjames Posts: 17,933 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Glad to see you were dubious. Bad economic times are the best times for such scam-schemes to foster.


    Absolutely. Anyone can claim to offer whatever rate of return they want for an unregulated scheme. Whether they can deliver that rate for any extended period of time is unknown and probably very unlikely.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • ColdIron
    ColdIron Posts: 9,531 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    edited 23 April 2014 at 1:31PM
    What is this? A quiet morning in the office?
    Off to the the big bit bucket in the sky for you as well :)

    Edit mw120 gone
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 346.5K Banking & Borrowing
  • 251.3K Reduce Debt & Boost Income
  • 451.3K Spending & Discounts
  • 238.7K Work, Benefits & Business
  • 614K Mortgages, Homes & Bills
  • 174.7K Life & Family
  • 251.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.