Storage Pods were advertised as a solid investment, with guaranteed returns for several years. They had a slick marketing campaign, headed by celebrities but now face investigation from the Serious Fraud Office, and one of the main companies at the heart of this business, Store First, face being wound up by the Government. A huge amount of people have invested large quantities of money in Storage Pods, and now face the possibility of losing some or all of their investment. Some protection could be afforded to those who invested via a SIPP, however anyone who bought their pods directly from Store First are likely unable to recover this investment.
Unlike a lot of other investments we see made through SIPPs, Storage Pods are relatively straightforward. These are predominately UK based, and involve the investor owning a pod, or several pods, which are then rented by customers as and when needed. The investor then receives the rental income. The huge returns promised rarely, if ever, materialised however, with a warning from the storage pods industry trade body that the promises made about an 8% return in the first 2 years, rising to 10% in the following 2 years was highly mis-leading. Despite a bullish response from the Store First CEO, it is clear a huge amount of people have not seen the returns promised. Customer who then try and sell their pods discover there is little to no market for selling their pods, and the asset does not therefore have the value they would expect it to have.
In May last year the Serious Fraud Office opened an investigation into the mis-selling of storage pods, also focusing on Capita Oak Pension and Henley Retirement Benefit plans, with over a thousand identified investors, and more than £120 million invested. This however has been identified as the “tip of the iceberg” by a spokesperson for the pension company Aegon in the above article.
Other serious concerns have been identified that relate to storage pods. The selling practices around them has also drawn the attention of lawmakers. Salesman, selling pods operated by Store First, were accused of fraud several years ago. Jackson Francis Ltd, operating a cold calling service and paid through an intermediary by Store First. However salesman have since admitted to forging documents, and copying signatures. Their director has since been banned for the mis-selling that occurred.
As many customers are now trying to recoup money lost through investments we are starting to see the courts approach to these investments. The Financial Services Compensation Scheme (the FSCS) has recently valued Storage Pod investments at nil, suggesting investors could lose their investment entirely. Store First itself is subject to a winding up order by the Courts, which is potentially bad news for investors who don’t have the protection offered by the FSCS if they have made a regulated investment. As this is an unregulated investment if a customer is to get at least some of their money back it is important to have some sort of protection offered- this would be offered if the customer has made an investment through a SIPP, or under the advice of a financial advisor.
