If you’re looking for a quick way to lose your money, investing in carbon credits looks like a good idea.
The Financial Conduct Authority has previously warned about the high risks of investing in carbon credits.
In the scam warnings section of their website, the regulatory advises “Investing in carbon credits comes with great risk and is generally only suitable for the most experienced and savvy investors”.
In an online poll the FCA launched last year, they discovered that nobody who had invested in carbon credits and responded to the poll had made any money.
This resulted in an article in Point Carbon under the headline “Carbon credit investors haven’t made a penny: FCA”
At the time, the FCA repeated their warnings about firms using “dubious, high-pressure tactics” to peddle illiquid or near-worthless offsets.
There is a very limited secondary market for these assets, so if you have bought carbon credits you are unlikely to be able to sell or trade them in the future. Effectively, they are worthless.
The BBC is reporting today that more than 1,000 people, many of them elderly investors, were duped out of a total of £24m in a carbon credit trading scam.
According to the BBC: “Financial firms operating the ploy sold investment in the credits, a UN-issued permit that allows a company to emit carbon dioxide, but can also be trade.”
Subsequently, the Insolvency Service has shut down 19 of the companies involved in the scam.
One of the companies reportedly involved was Eco Global Markets Limited which took £8.5m from 230 investors.
It is a real shame to read about elderly and inexperienced investors being scammed and conned in this way, in many cases losing their life savings.
Investors should only ever seek advice from independent financial advisers who are authorised and regulated by the Financial Conduct Authority.
Even then, investors need to invest with their eyes wide open and watch carefully for anything which seems too good to be true.
In the current low interest rate environment, we can understand the temptation for investors to participate in investment schemes which seem to offer a higher than average reward for little risk.
But the reality is, the link between risk and reward is unbreakable; if you want the potential for higher rewards, you are putting your money at risk – much greater risk than most investors are prepared to tolerate, in many cases.
Always watch out for investment salespeople who go the extra mile to convince you to invest.
Pay a fee for impartial advice which is not linked to the sale of a financial product, get recommendations in writing, seek a second opinion if you feel unsure and only invest in regulated products which you fully understand.
In addition to using an independent financial adviser, look for one which is a firm of Chartered Financial Planners. These firms, such as Informed Choice, have satisfied rigorous criteria relating to professional qualifications and ethical good practice.
The individual adviser you deal with should ideally be a Chartered Financial Planner, Certified Financial Planner (CFP) professional, or both.
This not only ensures they have demonstrated a sufficiently high level of professional knowledge, but that they personally subscribe to a code of ethics and maintain a sufficient level of continuing professional development each year.
There are unfortunately more than a few individuals and firms out there who are keen to separate you from your hard earned cash.
Always seek investment advice from properly authorised firms and keep your scam radar switched on when investing.
Do speak to us if you ever need an impartial second opinion before investing.
