Carbon credits are looming as one of the next big financial misselling scandals as regulators warn some of the investments offer poor value and are sold with high pressure tactics.
The UK Financial Services Authority (FSA) has already warned some carbon credit advisers offer misleading information and are driven to make a sale because they are paid high commissions.
The FSA feels some carbon credit schemes are similar to land banking cons and boiler room share scams, so buyers need to check the details of any investment before parting with any money.
One key point to watch for retirement savers is sales people are suggesting carbon credits are good investments for self-invested personal pensions (SiPPs), but many ‘verified’ deals may be worthless.
“Investors need to be careful because they could lose money on their investment by not being able to sell, or at least get a competitive rate, when trading a small volume of carbon credits,” said an FSA spokesman.
Industry insiders suggest some of the more dubious schemes are based in the Middle East.
Nigel Green, chief executive of the deVere Group said: “A worrying large number of companies are selling bogus carbon credits, particularly in Dubai, Abu Dhabi and the Far East.
“To keep their money safe, investors should always deal with regulated advisors selling regulated products. We are happy to try to advise anyone if they think that they have been sold a scam product.”
What are carbon credits?
A carbon credit is a certificate or permit which represents the right to emit one tonne of carbon dioxide (CO2) and they can be traded for money.
There are two categories of carbon credits: voluntary emission reductions (VERs) and certified emission reductions (CERs). We believe VERs certificates are increasingly being offered to UK investors.
Carbon credits can be sold and traded legitimately and there are many reputable firms operating in the sector.
How carbon credit scams work
Investors are cold-called or contacted by post or email and are offered carbon credit certificates or the chance to put money in to a ‘green’ scheme that generates carbon credits.
The sales pitch generally concentrates on how governments are compelling industry to offset emissions and that this is a chance to get in to a growing market first.
Trading carbon credits
Like trading stocks and shares, trading carbon credits involves knowledge of the market and how it works.
Common issues surround VERS – the credit certificates look certified, but they are voluntary standard and can involve accreditation by a wide range of organisations with differing quality standards. Some are valuable, while others are worthless, so you must understand what you are buying to set a fair price.
Many VER certifying bodies are outside the UK and unregulated, so no official body controls the quality of their schemes.
Unlike many other investments, carbon credits may are unlikely to be regulated and protected by the Financial Service Compensation Scheme, so if the scheme is a scam or has problems, no compensation is available.
The FSA warns that if a firm selling carbon credits is authorised by the FSA, the authorisation is not for selling the credits but other financial services, so no consumer protection applies.
What to do if you are offered carbon credits
First, do not hand over any money until you have checked out the validity of the credits.
Do not fall for high pressure sales pitches suggesting the offer is limited or offering a discount if you buy now. Large volumes of carbon credits are regularly traded and reputable sellers do not need to apply stress to complete a deal.
If in doubt, contact the FSA consumer helpline on 0845 606 1234 from 8am to 6pm, Monday to Friday (except public holidays) or fill in an online form on the FSA web site: www.fsa.gov.uk/pages/consumerinformation/consumer_contact/index.shtml
I have seen these being offered as a bait and switch on Plantation Investments in Asia. Buy trees and huge returns in 12 years . Call and express interest and be offered much larger returns in 2 years on carbon credits. Both investments are fraudulent as far as I can see but they talk about the fact you can switch your pension in. The FSA needs to call a few of these companies and close them down.
Great News for the General UAE Public, that these sorts of companies are being closed down. UAE Authorities closed AGT down this month.
Hopefully the Authorities will look into companies like Royal London 360 based in Office 1402, 14th Floor, Single Business Tower, Sheikh Zayed Road, Dubai, UAE.
Who have started up a Grey Market in UAE Financial Advisors, accepting business from brokers that offically should not be trading like Eventus Capital Limited, edwardskhatun, PWS.
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