Was Your Pension Invested in German Property via The Dolphin Trust? If So, You Could Claim Compensation

Len Burgess[1]

Len Burgess

Money Savings Advice Guide to pensions invested in german property

It is estimated that the German Property Group, formerly the Dolphin Trust, has taken £600 million in pension investors' money from UK customers with no returns forthcoming – and customers may soon be entitled to compensation.

If you have a SIPP (a self-invested personal pension), you have the freedom to decide where to invest it. Rather than being tied into a specific portfolio, you can (within reason) do what you think is best with your pension fund in order to get the best returns. 

And one of those options may be the promise to seriously increase your money if you invest in German property redevelopment. But these offers aren't always what they seem.

Read on to find out more about pensions invested in German property and if your pension was invested if you could be entitled to compensation.

The Dolphin Trust, Known As German Property Group

The Dolphin Trust is a property investment vehicle unregulated by the Financial Conduct Authority that has been compared to a pyramid scheme or Ponzi scheme. It was founded by Charles Smethurst and is a scheme you can choose to invest your pension fund in, but, as it is unregulated, you are doing so at your own risk. The BBC covered the story in an episode of "You and Yours" in 2019, interviewing people in Germany, including Ludwig Wallinger, a local mayor.

The business model was that putting investors money into buildings in Germany was good value – the property was being bought cheap and refurbished or rebuilt to be converted into contemporary accommodation, which could then be sold at a high price, including enough profit to pay a handsome return to investors.

The German government has offered generous tax incentives to residents who wanted to develop listed buildings following the fall of the Berlin wall, so there is definitely money to be made when invested and used correctly.

Who is Charles Smethurst?

The pension scheme was set up as The Dolphin Trust in 2008 by Charles Smethurst when it was known as German Property Group and became very popular a few years later. Indeed, much of the UK's investment with the company happened around 2013/2014, where a number of providers were recommending them as an opportunity for anyone with a SIPP.

Lifetime, Rowanmoor, Guinness Mahon and Berkeley Burke are just some of the named pension providers who sold the Dolphin Trust investment as an asset.

The promises made to investors were that their money would significantly grow, and in some cases, potentially double, provided they invested for five years.

However, investigations into the company were carried out in 2018 and 2019 following complaints that money wasn't being repaid.

Some people were getting their original amount back but with no interest payment. Others were getting nothing back at all. It was then uncovered that the company hadn't filed any annual accounts since 2014 and that there was huge uncertainty over where the cash was and whether it was all tied up in the property.

If it was, and the company was to go bust, chances are the property would only be sold for a fraction of its value, and so the money would be difficult to recover.

SIPP Providers That Recommended These Investments

Of course, the SIPP providers that recommended these schemes weren't left short of their money – they would have received their sizeable commission costs (believed to be 20%) when the investments were first made, and so their willingness to chase up the returns on your behalf is limited.

Also, customers who invested were promised that their pension pot would be safe due to the 'First Legal Charge'. This is a binding document in an agreement where, if a property investment company fails to repay the money, the investor can force the property's sale to get their money back. 

Yet none of the UK customers who spoke to the BBC as part of their investigation had received a First Legal Charge document, nor did they have any details for the specific property they had invested in. Indeed further investigation shows that as many as four charges may have been granted on a single development with the scheme, effectively quartering their value and rendering them useless.

The scheme hasn't gone completely quiet, and indeed the German group has responded to these allegations. They've said that only a small percentage of investors have been affected by the issues they've suffered, and they've blamed various factors, including construction delays.

They say, of the 60 properties in development, only ten have suffered setbacks and investors in the remaining 50 will be repaid on time.

The Future of German Property Investment

It should go without saying, based on the example proven by The Dolphin Trust, but you should be extremely wary of investing in German property – or indeed any unregulated asset – when it comes to your pension. Many people feel that they have become a victim of a pyramid scheme.

A SIPP is a complex financial product that is not suited to everyone. You need to be financially savvy if you want to take advantage of the flexibility it offers, as if you become complacent, you could quickly lose all your money.

Don't opt for a SIPP if you aren't comfortable with pensions and investments generally. You will, of course, get financial advice from an advisor, but it is best to make sure you have some understanding of where your money is going.

German Property Complex Investment Schemes

Their complexity also means they are easy targets for scams and less-than-favourable schemes. Salesmen and advisors can identify people with large funds and less financial knowledge, often dazzling them with claims of huge returns when, in reality, their money may not be as secure as they are promised.

So when a SIPP is offered the chance to invest in German property with huge returns, a customer may believe they have a fantastic deal on their hands when the reality could be very different.

That's not to say all German property investment choice is a bad idea. The tax break from the government has provided an excellent opportunity for German residents to redevelop the property, and they will need investors. But you need to be extremely careful who you deal with. The customers of the property company may yet get their promised returns, but it is looking decreasingly likely.

You would need to ensure you've sought the proper, legal, financial advice before joining any investment scheme, as only a legitimate financial advisor can tell you whether a scheme looks like a solid choice for investors, once they've examined all the details or if it looks too good to be true.

What to Do if You've Lost Money in an Investment

If you've invested in the Dolphin Trust or any other property investment scheme in Germany and you're worried about losing your money, you don't need to lose all hope. There is a chance that, even if the company does go under, your money could be repaid through the Financial Services Compensation Scheme.

The Financial Services Compensation Scheme does not cover unregulated assets directly, but if victims sought proper financial advice and invested through a SIPP provider, then you may be able to seek help through the Financial Ombudsman Service and ultimately the FSCS.

You may not be able to get all of your savings back, but investors should be able to reclaim some of it at least. At the very least, speak to a professional who can look at your circumstances and determine whether you have a right to apply for compensation or whether it is worth targeting the asset directly to try and force a sale to recover your original savings.

Can You Claim Compensation if Your Pension Funds Were Invested in Inappropriate Assets?

Yes. Unfortunately, many people still believe that if they agree to the advice proposed by their financial adviser, then they are responsible for the consequences. This may be true if transactions are completed on an execution-only basis but not if advice is given. If the advice turns out to be inappropriate for the investors, then you may well have recourse for compensation.

Should You Go Through a Claims Management Company to Pursue Damages/Compensation?

The Dolphin Trust/German Property Group is just one example of a number of troubled fund investments over the years. The fact they were unregulated reduces the protection for investors, but financial advisers can still be held to account.

Even the quickest of glimpses through this particular study will highlight the complexities when pursuing compensation. Therefore, it is no surprise to learn that many people prefer to go through a claims management company, one with experience in this particular area.

Do You Need to Provide a Paper Trail for Evidence?

The more information you can provide, the better. However, within a reasonable timeframe, your financial adviser should have details of your transactions and advice are given on file. However, when it comes to scenarios such as the Dolphin Trust/German Property Group, it would appear there is a potential case for mis-selling if that information isn't available.

When looking to protect yourself from potential mis-selling, it is important to maintain a paper trail and not just depend on verbal advice. This ensures that if there are issues further down the line, then you have written confirmation of what was discussed, what was advised and what was agreed.

How Much Does It Cost to Pursue Damages for Mis-Selling/Mis-advice?

There is a formal complaints process which you can follow without the assistance of a claims management company. However, this can become fairly complicated at times, and it is not always obvious how much compensation you may be entitled to. So, if you approach a claims management firm with evidence of your compensation/damages claims, they will give an independent opinion on your chances of success.

The majority of such cases are pursued on a "no win no fee" basis which effectively indemnifies you from any costs incurred by the claims management company in pursuing your case. If they believe you have a minimum 60% chance of success, the firm will likely offer to take on your case. In exchange, they will look to negotiate what is known as a "success fee".

Money Savings Advice Tip

If you were approached by a financial advisor presenting an investment opportunity in German property and you transferred your pension with the promise of high returns, you could be in line for compensation. Thousands of people lost money from their pensions that were invested in German property, our tip-is, speak to a mis-sold pension compensation specialist and see if you have a claim.

What Is a Success Fee?

As the claims management company is pursuing your case on a "no win no fee" basis, they will negotiate payment as a percentage of any compensation awarded. The average success fee is around 25%, although this can vary depending upon the type of claim and the duration of the case.

It Is Important to Hold Negligent Parties to Account

n this particular example, the Dolphin Trust/German Property Group would appear to have limited assets and unlikely to be in a position to compensate investors. Therefore the onus will fall back on the pension advisers who, by all accounts, placed £600 million of UK pension investments into the scheme. In hindsight, this unregulated scheme has turned out to be extremely high risk, with investors unlikely to receive any interest payments or return.

Pension compensation claims can be notoriously complicated, which is why many people choose the "no win no fee" route via a claims management company. Over the years, this has ensured that thousands of potentially negligent parties have been held to account, prompting a significant tightening of regulations and changes in business procedures. Unless these parties had been held to account, it is unlikely that such changes would have occurred.

How Can Money Savings Advice Help You With Making a Mis-Sold Pension Claim?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.

Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.


Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

How does Money Savings Advice work

Money Savings Advice is an independent editorial company providing detailed information about numerous financial niches with the aim of helping consumers make informed financial decisions. We aim to provide hints, tips and techniques to help you make your money work for you. However, we are not perfect, and we accept no liability if anything we write about goes wrong.

  • The information detailed on Money Savings Advice does not constitute financial advice. It is always advised to do your own research to make sure the product/solution we write about fits your circumstances.
  • The aim of Money Savings Advice is to match you with a financial advisor, claims management company or another financial service company that can help you with your financial needs.
  • Money Savings Advice aim to provide the most up to date and accurate information about all financial subjects, and as such we sometimes link to other websites, but we (Money Savings Advice) can’t be responsible for their content.
  • Money Savings Advice is independent and not linked to any financial company.


Who are Money Savings Advice

Money Savings Advice is a trading name of RMM Digital Publishing Ltd. Registered trading address, First Floor, 85 Great Portland Street, London, W1W 7LT. Trading in England and Wales, company number 11550143 with data protection number ZA747669.

Back to top