FCA Starts High Court Action Over Unauthorised
£23 Million Static Caravan Investment Scheme

CCG promoted an investment in static caravans, which were sublet to social housing tenants placed by local councils. Investors were told the scheme was government-backed and that they would receive a fixed rate of return. The FCA alleges this information was false or misleading, and the scheme was operated as an Unauthorised Collective Investment Scheme (UCIS).

It is further alleged that CCG carried out regulated activities without the proper FCA authorisation, and that the individuals and consultancies named were complicit.

While the court case is ongoing, CCG has agreed to freeze its assets, stop promoting the scheme and can no longer sell to investors.

An Unauthorised Collective Investment Scheme (UCIS) is considered a high-risk investment unsuitable for everyday investors. Investors’ money is pooled together to fund a large-scale project. Typically, these are property developments such as hotel complexes, apartment buildings, or nursing homes. In this case, the investment was in static caravans, with investors effectively becoming the homeowner, which was then sublet on their behalf.

Another recent UCIS making headline news was The Qualia Group, which offered investors the opportunity to earn 8-10% by investing in a retirement apartment development. That case also ended up at the High Court, eventually allowing investors to surrender the leases on their apartments and sell up. It was estimated that they would only be able to recover around one-third of their original investment.

Common features of such fractional ownership schemes include:

• Reassurances that investors will be ‘hands-off’ landlords, with someone else handling the letting and management processes, simply collecting their investment return.
• Properties may not be sublet straight away, meaning income is not available to pay investors their returns.
• In some cases, new investors’ money is used to repay earlier investors – effectively a Ponzi or pyramid scheme.
• When investors want to sell their share in the development, the property doesn’t sell quickly or sells at much less than what they originally paid, often below market value.
• Investors can lose a substantial portion of their initial investment and spend years trying to recoup their losses.

As Collective Investment Schemes are unauthorised by the FCA, investors are unable to get help from either the Financial Ombudsman Service (FOS), which deals with disputes between FCA regulated financial institutions and their customers, or the Financial Services Compensation Scheme (FSCS), a government-backed lifeboat scheme that steps in if an FCA regulated financial business fails.

Sarah Spruce, Legal Director at TLW Solicitors, commented:

“The High Court proceedings are in the early stages, and we will monitor the case with interest. Too many collective investment schemes are sold to investors who don’t necessarily understand the risks involved. The fact that the usual claims routes through FOS and the FSCS are not available should raise red flags, but investors must do their research and consider what impact losing the total amount of their investment would have on their finances.

I would urge anyone who has invested in CCG or another UCIS to contact my team for a confidential and no obligation discussion to explore what options may be available for getting their money back.”