Unregulated investments

Tammer

Hi,

I'm regularly reading in Trade Press about the FOS compensating people who were advised to transfer into SIPPs and then invested in unregulated investments, losing a lot of money.

For example, see the following:

https://www.moneymarketing.co.uk/fos-orders-ifa-to-pay-multiple-clients-for-unsuitable-pensions-advice/

I guess we see lots of posts on here with people considering investing in car park spaces, foreign property and other unregulated investments and being warned off (rightly).

My question is - are there any examples of unregulated investments actually working out well for consumers?

Thrugelmir

Unregulated investments aren't deemed suitable for consumers. If you cannot afford to lose 100% of your capital that you've invested. Then not for you.

Albermarle

There are many unregulated investments that are successful in bringing a high return for investors . However most are not really suitable for the average retail/individual investor, as they are too risky or complicated or not transparent , and as you say some really dodgy ones around.
The problem you highlight with unregulated investments in SIPP's was with relatively small players in the SIPPs market . As far as I know the mainstream providers do not offer any unregulated funds anymore.
The exception seems to be P2P lending and similar products which seem to inhabit some kind of half way position between being regulated ( as they have to jump through some hoops to get FCA and IFISA status ) and unregulated ( no FSCS protection)

AnotherJoe

There must be some* but since most are engineered simply to make profit for the originators by simply pocketing the cash with nominal assets to keep auditors and clients happy for a while to keep more money coming in, any money returning to the clients would be a mistake and would be dealt with before such a catastrophe happened.
I suppose the biggest exception that is available to the general public are crowd funded startups on the big crowd funding websites. Although many of those, including some of the very biggest schemes on them, are essentially scams as well once you understand the technology behind them, theres no way they can work, and many of those scams keep repeating and keep pulling in suckers.

No doubt there are some big crowdfunding successes. BUt there arent many and I would venture a guess that overall you will lose all your money in the same way as if you put £1 on every roulette slot.

Having said that i (and many others) once got scammed by a regulated company listed on the NASDAQ whose "product" turned out to be vapor and whose CEO sold the shares and ran off to Mexico with the money a couple of days before it went belly up, so regulated doesn't = not a scam, let alone safe, either.



* and they would be investments that are not advertised to the general public. I know someone who works for a private investment fund and they by definition are investing in unregulated investments" all the time. Startups generally.

jimjames

Tammer wrote: »

My question is - are there any examples of unregulated investments actually working out well for consumers?

Some of the people who get in early and get their money out can work out well. Those who invested with LCF and had bonds maturing before Dec 2018 could have got 8% back, admittedly it was almost certainly other people's new investment they got. Essentially during the phase when these companies need to show a track record to entice new investors they will be giving a return. Problem is that you don't know when the music will stop.

Malthusian

jimjames wrote: »

Some of the people who get in early and get their money out can work out well. Those who invested with LCF and had bonds maturing before Dec 2018 could have got 8% back, admittedly it was almost certainly other people's new investment they got.

And in reality most people whose bonds matured before Dec 2018 would have reinvested them in LCF and then lost their money. Why go elsewhere when they'd got 8% without fail?

Thrugelmir

AnotherJoe wrote: »

* and they would be investments that are not advertised to the general public. I know someone who works for a private investment fund and they by definition are investing in unregulated investments" all the time. Startups generally.

Having worked for a small SME that raised £21million of (private) venture capital. There's a surprising number of sophisticated investors that don't blink when writing cheques for six figure sums. They fully understand the risks of turning a concept into a marketable product. That will ultimately provide them with an exit route for their investment. With the vast majority of start-up's failing.