However, the lack of disclosure raises questions about whether pensioners were kept fully informed about where their money was going.
In its investment literature, OITS makes clear that conflicts of interest can arise when it lends to businesses owned by the broader Octopus Group. The company states that Octopus Group could stand to profit when OITS provides financing. Pensioners would not share in any profit made at this level.
Andy Agathangelou, founder of consumer advocacy group Transparency Task Force, said: “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.”
Octopus insisted that it took transparency seriously and said all loans from Fern to companies it had stakes in were reviewed by its investment committee, the conflicts committee and Fern’s board. An independent party also reviews its approach to conflicts of interest. All loans were made at commercial rates.
Industry professionals and former employees at Fern-owned companies have already raised concerns about whether pensioners were being given adequate information about the performance of their investments.
One of the loans made by Fern was to a private-hospital group, One Healthcare, which was also part-owned by Octopus Group.
Fern lent the company £64m, but it was forced to write off the debt after the company ran into difficulties. Fern subsequently took control of it from the wider Octopus Group and pensioners who backed Fern through OITS ultimately suffered a £42m loss on this investment.
Although they were told about the loss on the loan, investors were not informed that Octopus itself had a stake in One Healthcare.
Fern also lent money to Rangeford, a retirement village developer that the Octopus Group had a stake in.