Over the last few years, there has been a rise in schemes offering investment opportunities in parking spaces close to British airports. Scammers have been contacting people—usually in their mid-50s and close to retirement—promoting parking spaces as a pension investment.
Investigations into these schemes have proven that the majority are scams. For example, the case of a scheme involving car parking spaces in Paisley, where each investor invested more than £23,000 each in return for the promise of returns of 11%.
Then there was another case at Lode Hill, Styal, in Cheshire, near Manchester, where a similar scheme sold car parking spaces for £25,000 each, promising a guarantee of 8% returns.
These unregulated investment schemes were investigated by the Insolvency Service who discovered that the funds were being used to pay returns to initial investors in a Ponzi-style scam. These companies didn’t own the car parks when they were selling the spaces and they also took half of all investment funds in commission and other charges.
In another case, compensation is sought from a company called Park First for around 4,500 investors, many of them pensioners, who were convinced to invest their money in car parking spots. The scheme involved buying parking spaces at Gatwick and Glasgow airports for a guaranteed return of up to 12% a year and the company raised £230 million in total.
The method used to sell these parking spaces is similar to that used to sell other unregulated investments like diamonds or wine—products which are also frequently the subject of scams.
Investors are told that they can lease these parking spaces out to tenants, who will then sub-let them, guaranteeing a yield of around 8% a year. Some even offer a buy-back scheme when investors want to sell the parking spot—but this comes with no guarantee. The schemes also have hefty service fees.
These schemes are partly the result of the pension freedoms reform in 2015 which gave pensioners easier access to their pension funds. Many scammers have been taking advantage of this increased availability of money to encourage people to invest in illegitimate schemes.
Some victims are now starting to recover compensation for their lost money with help from the Financial Ombudsman and through the Financial Services Compensation Scheme.
But it’s better to make sure you never fall prey to such scams or dodgy investment opportunities in the first place. Here’s how:
If you’re contacted about a pension investment opportunity, certain things should always trigger warning bells. These include:
Check how long the company has been around. Is it really as established as it sounds?
And confirm whether the firm actually does have an official deal in place with the airport.
Before making any investments, get independent advice from a chartered or certified professional.