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What is Ethical Forestry?

On paper, Ethical Forestry seemed like a fantastic idea, especially for those who care about environmental sustainability. Environmental benefits, helping local communities in Costa Rica as well as securing a comfortable retirement for yourself sounded too good to be true and unfortunately, in this case, it was.

The Bournemouth based company encouraged investors to pay for Melina trees, which were supposed to be a more resilient tree to Costa Rica’s climate and were sold after a few years of growth, for timber. The money received would then be used to pay for more trees, which would happen again and again until investors received a payout.

At least 3000 people invested their pension pot into Ethical Forestry with a minimum investment of £18,000. Some people have invested significantly more, including our own clients investing up to £60,000. Some investors were promised returns of around £1 million over an estimated 24 years.

So, what went wrong? Most of the trees that made up the bad investments were of course, prone to risks, such as natural weather conditions, diseases, and pests. Even things such as political shifts in Costa Rica’s government and management/ownership issues were enough to de-value the assets. Unfortunately, Ethical Forestry was one of many unregulated SIPP pension schemes, which are not regulated by the Financial Conduct Authority (FCA), which leaves investors much more vulnerable. This will not have been explicitly stated. These investments are unregulated and unprotected and should not be promoted to the general public.

Why did so many people invest in them? Part of the blame lies with the Independent Financial Advisor’s (IFA) that have been responsible for recommending people to invest their hard-earned pension pot in Ethical Forestry without mentioning, or being aware that it is an unregulated collective investment scheme (UCIS). Investors were assured high return, low-risk investment guaranteed to result in a comfortable retirement. There is no such thing as a high return, low-risk investment. Low-risk means invariably low returns, and with high returns comes very high risk. It might seem obvious when you look at the whole situation, however, when you are speaking to someone who you think you can trust and they are advising you to do the right thing, it is completely understandable that you follow their suggestions.

Ethical Forestry is a classic case of mis-selling and if you have found yourself in this unfortunate situation, Henderson Lawyers can help! Our team offers unbiased advice and can help you make a claim on a no win, no fee basis. So if you are in need of some help, get in touch today and see how Henderson can help!

Posted on April 11th, 2018