Sunita Somvanshi
They were promised a legitimate inheritance tax planning tool. Instead, thousands of pensioners were unknowingly bankrolling the fund manager’s own failing businesses — and when the loans went bad, the pensioners picked up the bill.
Nearly 18,000 pensioners invested in the Octopus Inheritance Tax Service, known as OITS. Their capital was directed into Fern Trading, a vehicle holding roughly 300 firms across the energy, property and telecoms sectors.
On the surface, that matched the promise. But Fern also quietly directed investors’ money towards troubled enterprises in which Octopus Group held separate stakes. Several of those ventures collapsed, leaving investors nursing substantial losses — including a £42 million hit on a single failed hospital chain.
The starkest example involves One Healthcare, a private hospital group in which Octopus Group held a stake. Fern extended £64 million in loans to the company. When One Healthcare encountered serious difficulties, the entire debt had to be written off. Fern was forced to assume control of the hospital chain from the wider Octopus Group.
Pensioners who had backed Fern via OITS ultimately bore a £42 million loss on the investment. While investors were informed about the financial hit from the failed loan, a critical detail was withheld: Octopus Group’s own ownership interest in One Healthcare was never disclosed to them.
A similar pattern emerged with Rangeford, a retirement village developer that was also an Octopus Group venture. Fern channelled pensioners’ money into the company through loans, but the project was beset by cost overruns and significant delays. When Rangeford proved unable to service its debts to Fern, the loan was written off and Fern instead took ownership of the developer.
Octopus maintained that all financing provided by Fern to connected companies was scrutinised by its investment committee, conflicts committee and Fern’s board, with an independent party also reviewing its conflicts approach.
Andy Agathangelou, who founded the consumer advocacy group the Transparency Task Force, said the revelations posed fundamental questions about investor trust.
“These latest findings raise serious questions about whether Octopus has met the standard of transparency that investors are entitled to expect in a complex inheritance tax investment structure,” he said.
A spokesman for Octopus Investments said: “We’re committed to communicating openly with investors and their advisers, continually improving the information we provide, and focusing on delivering positive long-term outcomes for shareholders.”
