Monday, September 29, 2014

Are you affected by investments in Storefirst Limited storage pods?

Have you invested money in "storage pods" through a company called Storefirst Limited? If so, I would like to hear from you as a friend of mine has been affected by this.

The scheme seems to have run like this: people were encouraged to buy storage pods for sums of several thousand pounds, Each pod was registered as a separate property with the land registry. These were then leased back to a subsidiary company of Storefirst who rented them out as part of as self storage business. Owners receiving a guaranteed 8% per year in rental fees for the first two years.  In my friends case this was paid for the two years but immediately this period was up the company invoked the break of the lease which was possible after the two years was up. There is now no income on the investment and he is left trying to find someone to rent the pod - a process which is entirely under the control of Storefirst. The company offer to buy back the pods, but this seems to be a process that takes ten years and makes the (big) assumption that the company is still trading at that point.

The scheme was promoted and sold through independent financial advisors with the help of a promotional video featuring Quentin Willson:

You can find a summary of the sales prospectus here (no mention of a two year break point).

The Self Storage Association has queried Storefirst's business strategy here (PDF file).

A very serious question arises over how Store First is funding the guaranteed returns to existing investors...
It may yet prove to be the case that the rental returns being paid to investors are in fact being funded from the sale proceeds of new units, and not the operation of the self-storage business.
If this is indeed the case, then the Store First business model would not appear to be sustainable.

Storefirst subsequently rebutted this in this article.

However, Storefirst are still selling new pods in spite of  existing ones that re not being rented out. I would like to know the scale of this problem. How many people have had the leases broken after two years and what has happened to them?

The Financial Conduct Authority issued a warning to financial advisers in January over this and similar unregulated investment schemes which financial advisers were recommending pension transfers into.

It seems to me that if this was a conventional investment in a private company you would have been able to protect the investment through preference shares or other guarantees, but as these have been structured as property transactions it would make it very difficult to get compensation through a court. According to an article written by Tony Hetherington at This is Money:

So have FCA investigators taken an interest in Store First as well? Yes they have. But Whittaker has advice from a top barrister who says his sale of storage pods is not an illegal collective investment scheme. Investors do not have to let Store First manage their pods. They can find their own storage customers, and find their own buyer if they decide to sell their pod.
Whether or not the scheme is sensible, safe, and financially sound is debatable. Its boss has attracted the attention of investigators more than once, and its marketing claims do not all hold water.

To add further to my concerns, the principal shareholder in Storefirst appears to be a man called Toby Whittaker. Described as a "property millionaire" he seems to have had a number of businesses fail leaving investors out of pocket.

In 2010 he was robbed at knifepoint at his home. According to the Daily Mail:

The buy-to-let boom earned Mr Whittaker a fortune, but last year the firm's residential arm collapsed with debts of £100 million.
Hundreds of investors lost deposits of up to £20,000 on apartments whose construction has now been put off indefinitely.
Among them was Manchester United star Ryan Giggs, who had put down £20,000 on a flat in Clippers Quay in Salford.
Angry buyers exchanged messages on websites demanding to know how to get their money back.
Some claimed they had been asking for refunds for months before the firm went into administration but instead were told their deposits were being transferred to other projects.
One investor was reported to have staged a ten hour sit-in at the company's head office in Padiham, Lancashire, until bosses agreed to give him a refund.
Top legal firms are now representing scores of people seeking to get their money back from Mr Whittaker, whose other firms are still trading.
At the same time, police were investigating an alleged insurance fraud relating to another burglary at his home, and he is due to stand trial over the matter later this year.
He was at home in his secluded hilltop mansion near the Lancashire village of Read on Thursday evening when the masked gang staged their raid.
Despite a wall and six-foot electronic gates, they managed to evade security and burst in, armed with a crowbar and a Bowie hunting knife.
After forcing his 32-year-old wife and four children to cower under a table they beat up Mr Whittaker before ransacking the house for jewellery and fleeing in the family's £60,000 Audi Q7 4x4 car.
Lancashire Police confirmed detectives were investigating Mr Whittaker's business dealings as a possible motive for the raid.

As I said at the start of this article, I have no personal involvement in this scheme other than having been asked to help someone else extricate himself from it.

Have you invested money in Storefirst Limited?
Has your lease been broken after two years?
Have you tried to resell or sell back the pod?

Please leave a comment and I will see what comes of this.

Wednesday, September 24, 2014

Why I have not pressed the button on joining the SNP

As I write the membership of the SNP stands at 57,243 - up from 31,601 before the referendum. People are still signing up in their hundreds every hour, but so far I have resisted the urge. Why? because I don't think their policies are enough to make enough of a difference to real life in Scotland. What we need is system change not regime change. And that means no more of the neoliberal consensus that the SNP is part of.

Even though the outcome of the referendum, and the way the Better Together campaign conducted themselves sent my socialist nerves jangling, I don't think that committing to more-of-the-same at Holyrood is the way forward. I don't think that many of the Yes activists do either. The SNP at Holyrood is a very disciplined political machine and it remains to be seen how that will change with an influx of new members and a change of leader.

The SNP is not a progressive party. Here are some examples of their non progressive policies:

  • The number of university students from low income households has dropped over the past ten years. Funding cuts to further education colleges has further reduced access to higher education for young people from low income families.
  • The SNP does not support a reinstatement of the 50p rate of tax for high earners.
  • Proposing to reduce corporation tax, when this is a tax already being avoided by many multinationals.
  • The council tax freeze has caused local authorities to cut funding to voluntary organisations providing care services to the elderly and others.
  • Wanting to get rid of Trident while maintaining a nuclear cover through NATO membership.
  • The SNP do not believe in redistribution of wealth and want to tackle poverty through economic growth. Much of that initial growth seems reliant on the oil industry. Yet, if we burn that oil we submit our planet to the effects of climate change, which will make the world's poorest countries poorer still.

These are all fairly intractible problems for me and explain why, for now, I am not lining up to join the SNP.

Tuesday, September 23, 2014

The referendum aftermath. #the45

I have not said anything since the referendum took place because I wanted to take time out to reflect on the issues. Now that things have had a few days to settle my thoughts are becoming clearer. These are the main things in my mind at the moment.

It was not a clear, once and for all, victory for the No campaign.
They may have got 55% of the votes, but the majority of working age people voted Yes. This means that the demographic will move in and in ten year's time there will be a majority for independence.

It was a dirty fight.
Leaving the issue of the behaviour of the mainstream media aside, there were three activities by the No campaign which I found reprehensible:

Changing a No vote from a vote for the status quo to a vote for devo max after the postal votes had been cast and so close to the polling date that their proposal could not be investigated or challenged.

Better Together phone canvassers from England (they could not get sufficient volunteers in Scotland) phoning Scottish pensioners and telling them that their pensions and bus passes were at risk if the vote went in favour of independence. Most of these volunteers were Labour Party members.

It was a fight for preservation of the political class
Labour Party members campaigning with Conservatives, and even the National Front (in Aberdeen). The main focus seeming to be to retain a voting block of Labour MPs from Scotland - but to what end? Simply the Westminster political elite doing a bit of job preservation.

Where do we go from here?
Six months ago I did not mind which way the referendum went, but as it came closer I realised that the future of our country and the future of my children is best served by decision making about Scotland taking place in Scotland. The question is how to achieve this. As I am writing the SNP is on track to become Britain's largest political party. Huge numbers of Yes support rs are joining and this will give the SNP the ability to run a massive campaign for the next Scottish Parliamentary election. I have an urge to get involved in active politics too, after a few years away, but I don't agree with the SNP's central emphasis on sovereignty. Moving from one group of leaders to another will make no difference.

At the moment we have a great national consciousness of politics, but we need to move from this to wresting power from the state and back into the hands of ordinary people. What we need to come out of this referendum process is a mass participatory democracy. Scottish Labour are currently promoting a scheme which claims to do this, but without any real power, because the real power comes from ownership. Yes, I know that sounds very "clause 4", but it's plainly true that real power lies with those who control the means by which money is made: banks, investment funds, oil companies and our currently centralised state (which is itself a supplier of infrastructure). Until this power is broken we will continue to have an increase in inequality between the poorest and the richest in society.

To move power to the hands of ordinary people would require more than a change of government. It would require a change in values across the whole of British and Scottish society. A move away from the extrinsic values of status and wealth to intrinsic values like community and self fulfilment (the sort of values that Are also central to Christianity). In the mean time we need to look at promoting collectivism (social enterprise, cooperative business models and other ways of working). Those of us with pension funds might be able to pressure our pension trustees to invest in businesses which promote this type of cooperation. In banking we need to look more at the mutual model. For example, the Airdrie Savings Bank is a proper bank, but run on a mutual basis.

Above all we need to challenge the power of the state to tell us what to do. We need to start holding politicians to account, and we can start by ensuring that they carry out their promise of more powers for the Scottish Parliament.

Political parties
Now, on the issue of political parties, some friends are surprised that I am not a member of the Green Party. This is with good reason. Although I care deeply about the environment, I think the pressure on the environment is the result of our economic system which needs to continue growing to pay debt interest. This is a circle that spirals on forever. We need,to break that and I know the Greens agree. Where I disagree with a lot of Green Party activists is that they appear to not have a real understanding of poverty. It might be great to eat sustainable sour dough artisan bread and locally produced organic food if you have good job and a comfortable home in Portobello, but if you live in Muirhouse this is cloud cuckoo land. The real cause of poverty is economic and fiddling at the edges will not cure this, whether that is the SNP's sovereignty or the Greens' sustainability. This is why, at the moment, I will not be joining either, but will be looking to get involved in something to advance these issues.