Business

Keep your eye on the ball when it comes to investments

Former Manchester United star Rio Ferdinand is among a host of ex-footballers who face massive losses over a 'mis-selling' investments scandal
Former Manchester United star Rio Ferdinand is among a host of ex-footballers who face massive losses over a 'mis-selling' investments scandal Former Manchester United star Rio Ferdinand is among a host of ex-footballers who face massive losses over a 'mis-selling' investments scandal

HAVE you a footballer in the family?

If so, they’ll confirm my nugget of wisdom for this week: it’s never a good idea to take your eye off the ball.

However, this is exactly what happened to a whole raft of the UK’s top footballers, who were talked into investments which were, at best, high risk and, at worst, nothing less than dodgy.

Their stories were revealed lately in The Sunday Times.

The first of these scenarios relates to deals made in 2007, but like so many dodgy investments, it has taken years for the reality to come to light.

The investments were presented to ‘big name’ footballers including Rio Ferdinand, Andy Cole, Danny Murphy and Martin Keown, as well as a host of other football stars who invested an estimated £100m.

The money went into projects ranging from film schemes to property ventures.

It later emerged that one scheme involved a yacht berth development in Florida which had no access to the waterside, and a property scheme in Spain, according to The Sunday Times. It appears that some of the footballers borrowed heavily to finance the projects, and now face potential financial ruin as a result.

These stars are heavy hitters who can raise millions with just one phone call.

For those of us who can’t raise much more than a pizza with one phone call, further tasty news has emerged in the past week that may be more relevant – and it all happened right here in Belfast.

A Belfast software developer who liked to order his takeaways on the ‘Just Eat’ website received a scam email purporting to be from the company, asking him to fill out an online survey.

He was promised £10 for his participation.

When he clicked to take part, he was linked through to a professional-looking clone of the real ‘Just Eat’ website, and completed a fake, but very convincing survey.

At the end, the scammers requested his bank details so that they could transfer him his £10.

This type of scam, in which a request is made for bank details, is known as ‘phishing’.

Luckily the man became suspicious and did not hand over the sensitive information; instead he reported the scam and the Information Commissioner’s Office is now investigating.

There are a number of other very common scams now doing the rounds that can also sting you if you take your eye off the ball.

The first type is the share fraud or ‘boiler room’ scam. A boiler room is a mini call centre from with plausible-sounding staff cold-calling potential investors to offer them bogus investments.

You may recall that, back in June, fraudsters were ringing people to offer them a bogus opportunity to invest in Ferrari shares, pre-empting the actual sale of shares in Ferrari, which did not take place until October 21.

The scam received widespread coverage in the news and in this column as well.

Potential victims were phoned by very persuasive cold-callers claiming to come from a number of fake companies with authentic-sounding names such as Charlton Fitzgerald, JC Sterling & Roth, and Vanquish Wealth Management.

In one sad case, a senior British scientist was conned out of half his life’s savings, when he invested £176,000 in non-existent Ferrari shares.

Another one to look out for is the ‘land banking’ scam.

This is where you get a call offering an investment in a plot of land earmarked for development, on the basis that once planning permission comes through, it will soar in value. Later, you find your land stands no chance of getting planning permission as it is green belt, nature conservation, agricultural, or some other kind of protected area.

The Financial Conduct Authority (FCA) reckons land banking schemes have already cost UK investors as much as £200m. Plots sold recently include one on a 45-degree slope, one without any access to it, and one on a site of special scientific interest. Other plots are simply too small to build on.

Then there’s the ‘old dependable’ – the pensions early release scam, also known as ‘pension unlocking.’

This targets people under 55, tempting them with offers to withdraw cash from their pension early, ahead of their 55th birthday.

Here’s the bit they don’t tell you on the phone: unless you have certain special circumstances, such as terminal illness, any early withdrawals from your pension are subject to 55 per cent tax (or 70 per cent if you fail to tell HMRC about it) – and the scammers will have taken their fee on top of that as well.

The sure and safe way to avoid getting burned is not to entertain or respond to cold-calls, which, as the FCA says, seldom come from legitimate companies.

Consult a reputable independent financial adviser for quality information on genuine investment opportunities.

Otherwise one day a sudden shock could come your way that will really take the air out of your football!

Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005