INVESTORS in a Glasgow Airport car-parking scheme that was deemed untenable by the Financial Conduct Authority (FCA) have just a few days left to cash in their investment before it converts into a so-called lifetime leaseback scheme.
Park First - which operates 6,000 parking spaces across the Direct Parking, Skyport, Park N’ Fly, Park Fast, SwiftPark and Park Safe car parks next to Glasgow Airport - was forced to alter the structure of its investments after the FCA stepped in at the end of last year.
The firm had initially sold the Glasgow parking spaces for £20,000 each with the promise of an annual return of eight per cent in the first two years followed by projected returns of 10% in years three and four and 12% in the following two years.
However, after the FCA ruled that the investments were effectively collective investment schemes, which come under its remit but which Park First is not authorised to operate, the firm voluntarily agreed to restructure them.
Investors were given the choice of converting their original investment into a lifetime leaseback, which offers annual returns of 2% in addition to a dividend-bearing shareholding in Park First, or cashing in their investment.
Anyone choosing the latter option will have to wait for up to a year to get their money back, during which time they will have to surrender ownership of the space so that Park First can resell it.
The amount of rental income they have already received will also be deducted from their original investment, meaning £1,600 per space will be taken off for the first two years, £2,000 for the next two and £2,400 for years five and six. Park First will then add annual interest of 2%.
That means someone who paid £20,000 for one parking space four years ago would see £7,200 deducted from their investment and £1,024 added on before they got their cash back, resulting in a total payment of £13,824.
In an investor update the firm also said that “if the Park First company buying back your lease became insolvent before completion of the buy-back or before it paid you, you would be likely to receive less than the full amount due”.
Investors have until May 31 to make their decision, after which time the only way for them to get their cash back will be to sell their lifetime lease onto a third-party investor.
A spokeswoman for Park First said the firm believes the lifetime lease “is a superior investment to the original structure”.
She added that “so far over 70% of investors have chosen to continue their relationship with Park First”, which operates similar schemes at Gatwick Airport and Luton Airport.
However, the lifetime lease does not offer investors any more protections than the previous Park First structure because, unlike a collective investment scheme, a lifetime lease is simply not regulated by the FCA.
As the regulator said: “Park First is not authorised by us and is not permitted to provide regulated financial services.”
“Investing in an unregulated investment provided by an unauthorised firm means you are not protected by the Financial Services Compensation Scheme or The Financial Ombudsman Service,” the FCA said in a statement posted on its website.
“We do not endorse the lifetime leaseback or any other Park First investment.
“We express no view about the merits or level of risk of such investments.
“We have not verified the factual accuracy of the promotional material for the lifetime leaseback scheme.”
The regulator also recommended that any existing Park First investor should “seek such independent financial and/or legal advice to assist them in making their decision as they consider necessary” before choosing what to do with their investment.
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