GPG enters bankruptcy proceedings as FCA urges investors to contact advisers
The German Property Group/Dolphin Trust companies have entered preliminary bankruptcy proceedings in Germany, while in the UK the FCA has urged investors to contact their financial advisers as soon as possible.
The German Property Group (GPG) companies, also known as Dolphin Capital/Dolphin Trust/Red Rock, have this week entered preliminary bankruptcy proceedings in Germany. The FCA has warned that any UK money invested in these schemes are now at risk, and is calling on investors to take action as soon as possible to recover as much of their money as possible.
GPG, which is an overseas property investment scheme, is not authorised by the FCA, though the FCA is acutely aware that many UK investors have put money into the scheme. The investments into the scheme have been made via self-invest personal pension schemes (SIPP) or small self-administered schemes (SASS).
However, the FCA are keen to speak to UK clients who invested through a financial adviser and/or a SIPP operator in the UK, as this would fall under jurisdiction and, therefore, compensation from the FSCS could be acquired.
The FCA, FSCS and Financial Ombudsman have all stated that they are working closely together and will be issuing further information as the situation develops.
All eyes on the financial advisers
This development in Germany has put more pressure on the UK financial advisers who advised their clients to invest into the scheme. The FCA released an update this week urging investors to contact their adviser to complain directly to them.
In the update the FCA stated:
A number of companies in the overseas investment scheme, German Property Group, have recently entered preliminary bankruptcy proceedings in Germany.
This means that any money you might have invested in this scheme is at risk and you need to take action now to help recover this.
We are working with those financial advisers we have identified as advising UK customers to invest in GPG, as well as the Sipp operators we have identified that are holding people’s investments.
This follows an update from the FSCS last month who didn’t have much good news for investors either. The lifeboat fund has begun its investigation into the compensation claims and warned investors that “returns to creditors could be uncertain, potentially very low, and also take a long time.”
The German administrator, Goerg, also bemoaned the “total mess” of the The Dolphin Trust books. They said at the time:
the bookkeeping, the documentation and all other relevant information regarding assets, money, etc. are incomplete, not available in the first place or just a total mess, we probably need at least until the beginning of 2021 before we are in a position to talk about any concrete investment or assets.
Who are The Dolphin Trust/German Property Group?
The Dolphin Trust is an investment scheme that specialised in the refurbishment of listed buildings in Germany. The Dolphin Trust, as it was known in April 2019, claimed to buy derelict buildings in prime locations which it then redevelops into luxury apartments. It is now known as German Property Group (GPG).
Through UK financial advisors and introducers, the GPG has borrowed an estimated £600m from UK investors via SIPPs and SASSs. They told these investors that their money would be safe because of the “First Legal Charge” they would get against the property – a document which entitles the investor to claim their money back from the sale of the property if the borrower fails to repay. As far as we are aware, not one client received their supposed “First Legal Charge”.
The Dolphin Trust/German Property Group hit headlines in May 2019 when a BBC report found that many investors had not received any of the returns on investment they had been promised.
Many of the investors who have lost money are not experienced investors and have invested their entire life savings into GPG. The BBC report tells of warehouse worker, Roy from Kent, who transferred £35,000 from his pension and expected to receive money back in March 2019. This never came true and the investor had potentially lost the entirety of his pension. Unfortunately, this story is just one of many.
How can Smooth Commercial Law help?
Are you a Dolphin Trust/German Property Group investor? We may be able to help.
If you think you are the victim of a mis-sold SIPP from The Dolphin Trust, or if your SIPP is not performing as you were told it should be, then please get in touch with our specialist mis-sold SIPP solicitors to see if we can claim compensation for you.
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent, fraudulent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.