Timeline of events: 1st, 2nd & 3rd Generation Scams
1st Generation ScamFirst generation scams involved cold-calls and brochure, offering things like physical but high-risk and unregulated investments, such as commercial property, leading to a direct investment.
2nd Generation ScamsPeople caught onto the dangers of these investments, so scammers obscured the high-risk investments by creating SPVs (special purpose vehicles).
3rd Generation ScamsEventually, these bonds ended up with Discretionary Fund Managers to help further obscure the high-risk nature of the investments, adding an extra layer of disguise to the sales process to make it more difficult for people to understand what they are actually investing in.
2017: Warnings and Regulator Action
The FCA’s warning was sent out to pension providers in 2017, and around this time, several IFAs and DFMs were taken to task over issues with DFM portfolios and SIPP mis-selling, including:
In some cases, DFMs were told not to take in any new client money into their portfolios (such as Greyfriars Portfolio Six), and many firms have now entered into insolvency proceedings.