Hotel developer The Resort Group advertises for new investors with promises of 21% returns as hundreds of previous backers seek compensation for bad advice

It lists its corporate HQ address as a suite in Gibraltar.

When the Evening Standard asked the company how it could still be trying to raise public money given so many people claimed to have been let down before, Josef Safranek of The Resort Group’s “crypto sales team” said: “I am sure you are fully aware that FSCS compensation claims are against the IFA who provided advice on investments to clients, not the product provider.”

He said: “The majority of investors have been paid all contractual returns,” although he admitted payments had not been paid since Covid closed the hotels.

FCA sources said the regulator would look into the advertising but stressed that its powers were limited because the company was based offshore.

Law firms and claims management companies say they have many clients complaining about TRG investments.

Pradeep Oliver, partner of Cripps law firm, said: “Unfortunately I have seen numerous cases over the last 12 months in which retail clients have been switched out of suitable low risk pensions and into SIPPs for the purpose of those funds being invested in The Resort Group investments.  

“It is astonishing that any reasonably competent IFA could have possibly considered that an investment in an illiquid fraction of a hotel room could be suitable as a pension investment for the average retail client.  

“The numbers of claims being brought to the FSCS is concerning and suggests that the precise scale of the problem is not yet known.”  

Rowanmoor is now owned by the financial services company Embark.

A spokesman said: “Rowanmoor is a SIPP provider and operator, it does not give either financial or investment advice to any party.

“We strongly believe that we undertook all necessary requirements of us as a SIPP provider.”

An unhappy customer  

Zachary Turner, 57, is one investor seeking compensation over the advice he was given to invest in The Resort Group. 

He says he was advised in 2011 by an IFA to transfer his Scottish Widows pension into a Rowanmoor SIPP and from there into an off-plan hotel development - The Resort Group’s Dunas Beach Resort.

“The presentation was so slick, it just looked amazing,” said the Leigh-on-Sea estate agent. 

“They said we’d get low returns in the build phase, then an absolute minimum 14%, but more likely 25% after that.”

He claims he invested £35,000 for 100% of an apartment but receives a fraction of what he was promised. He says his typical quarterly income is e153, with e100 of that eaten up by service charges.

Because the property is owned by multiple people, whose identity he and his lawyers cannot uncover, he says, he cannot sell it.

He claims he is not even allowed to stay there because that would be a benefit-in-kind for tax reasons.

“So, the place is worth a fraction of what I paid. I can’t sell it, can’t stay in it.”

Turner says he was sold the investment by an adviser from a firm called CIB (Life & Pensions), which has subsequently gone into insolvency.  

Turner said the CIB adviser had also advised other people in the area also to invest.

CIB also facilitated investors to put money into Harlequin Property, a hotel investment company which went bust.  

Rowanmoor owner Embark said it stopped working with CIB in 2013.

It said: “The FSCS has paid out against advice provided by CIB, however Rowanmoor continues to have a clean record in relation to adjudications in this respect.”