We review Concept Capital’s investment paying 10% per year

Concept Capital offers an unregulated investment in pre-fab “static homes” paying a “guaranteed” 10% per year.

Investors invest their money to Concept Capital in units of £39,999 (although the website suggests that the minimum investment is £20,000), which is used to buy a static home to be rented to low-income government-supported tenants. Concept Capital “guarantees” to pay the investor 10% per year. Investors’ money is tied up for two years, after which Concept Capital undertakes to buy the static home back from them.

Concept Capital is an FCA-regulated firm, being an appointed representative of What Credit Limited. Its investment opportunity is however unregulated; What Credit (and by extension Concept) is only authorised to offer credit broking and debt counselling and not to run investment schemes.

This is notwithstanding Concept Capital’s claim on its website to be regulated.

Is this a regulated product?
Yes. The unit(s) we provide are regulated by the National Caravan Committee Approval

As an investment scheme Concept Capital is unregulated. The National Caravan Committee does not regulate investment schemes.

The investment is currently being promoted on Facebook by unregulated introducers.

Who are Concept Capital?

Concept Capital Group Ltd is 100% owned by sole director Ian Elliott.

According to his LinkedIn profile, prior to founding Concept Capital, Elliot was a materials manager at a builder’s merchant.

Concept Capital Group Ltd was incorporated in October 2019 and due to its young age is yet to file accounts.

Concept Capital claims the investment has a “6 Year proven track record”, based on a “trial period” run between Social Park Housing (who manages the homes) and Knight Mobile Homes (who manufactures them). The reality is that as an investment opportunity, Concept Capital did not exist before October 2019 at the earliest (when its company and website were registered).

How safe is Concept Capital?

Concept Capital claims to offer “guaranteed return of 10% per annum”, “guaranteed buyback” and “an opportunity to invest ethically and with peace of mind”.

In reality, as with any investment in an unregulated individual company, Concept Capital is an inherently high risk investment with a risk of up to 100% loss.

The guarantee to buy investors’ static homes back is dependent on Concept Capital having the money to do so. Otherwise investors will be trying to sell park homes on the open market. In which case, given that they aren’t going to be offering a 10% per year return, they should expect a significant loss.

The investment literature states that investors will own individual static homes with chassis numbers, but how this squares with the minimum investment of £20,000 being lower than the static home unit cost of £39,999 is not clear. [Update 14.01.21: Concept Capital have told me that for investments of £20,000, Concept Capital bought the other half of the static home. This option is no longer available for new investment.]

Bearing this in mind, should Concept Capital fail to make enough money to pay investors 10% per year on top of their own costs, there is an inherent risk that they will default on their “guarantee” to return the investor’s money in return for the static home.

The worst case scenario is that Concept Capital cannot even supply a static home to the investor and the investor loses up to 100% of their money.

If investors plan to rely on Concept Capital’s “guarantees”, it is essential that they hire professional due diligence specialists (working for themselves, not Concept) to confirm that in the event of a default, the assets of Concept Capital would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Concept tells them about their assets.

Concept Capital claim to offer a “Diverse Portfolio” on their website on the basis that investors can “Work with our business development team and grow your portfolio holdings”. Investing more money in a single unregulated company, as Concept Capital suggest here, is the exact opposite of diversification.

Regulatory risk

[Update 14.01.21: This section has been amended after contact from Concept Capital – see below.]

My original version of this review flagged the risk that the Financial Conduct Authority deems this to be an unauthorised collective investment, given that if an individual investor’s static home does not pay sufficient returns to pay the investor 10% per year, Concept Capital’s “guarantee” requires it to pay the investor from other resources.

Concept Capital denied they are running a collective investment scheme and told me that the FCA contacted them in November 2020 and, after Concept Capital answered their queries, ended their investigation without taking further action.

Regardless of whether Concept Capital legally qualifies as a collective investment scheme or not, if the FCA has investigated and closed its file, the risk of regulatory action appears to be moot. The FCA has been contacted for comment.

Note that regardless of the FCA apparently giving Concept Capital the green light to continue operating its investment scheme, all the other risks identified in this article still apply.

Should I invest in Concept Capital?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated investment, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment paying 10% per year is inherently extremely high risk. As an individual, illiquid security with a risk of total and permanent loss, buying a static home from Concept Capital is much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

• How would I feel if the investment defaulted and I lost 100% of my money?
• Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
• Have I conducted due diligence to ensure the asset-backed security can be relied on?

If you are looking for a “guaranteed” investment, you should not invest in unregulated investment schemes with an inherent risk of up to 100% loss.