SAVERS are being lured into investments such as wine and art as an alternative to the lacklustre stock market, but the potential returns may be exaggerated, the costs can be high and scams are rife.

The Department of Trade and Industry (DTI) is understood to be investigating a company called Holland and Kobeck, which promises a return of 10.4% from works of art. However, at least two people who signed up to the scheme fear they have lost nearly all their money because the art they bought has turned out to be virtually worthless — or may not exist at all, according to an investigation by the BBC’s Working Lunch television programme.

Holland and Kobeck claims to buy works of art on behalf of clients and then lease them to companies to provide an annual income. Bertram Mandelbrote, a psychiatrist from Oxford, paid £4,300 for a picture of Sir Stanley Matthews, the late footballer. But when his annual dividend cheque did not arrive in August, alarm bells started to ring. He said: “I thought there was something wrong because it was impossible to contact them. They stopped answering my correspondence.”

Bertram thought that he had bought an original painting of Matthews by an American artist, but he has since discovered that he purchased one of 650 lithographic prints of the footballer. They are worth just £180 each.

Lucy Chubb, another investor, paid £3,000 for a Matthews print and £3,500 for a share of a painting apparently called Sarlat by Laurent Flaveur. However, Working Lunch’s Virginia Eastman found no trace of either the artist or his picture. Nobody from Holland and Kobeck was available for comment last week.

The DTI said: “Hundreds of thousands of people have been targeted with bogus investment schemes, including art and wine scams. Unsolicited approaches are accompanied by exaggerated claims about the likely returns. In fact the goods turn out to have little or no real investment potential, or may be sold at such an inflated price that a loss is almost guaranteed. We have closed down 17 companies, but we estimate that consumers still have more than £350m in firms running these scams.”

Despite the pitfalls, interest in alternative investments is growing among investors who are disillusioned with subdued stock-market returns.

Spencer Ewan of Seymour, an art adviser, said: “Equities have been pretty boring for some time now and hedge funds are struggling as the market matures, so institutions and wealthier individuals are looking for a different home for their money.”

Demand is expected to become even stronger from April next year, when savers will be able to invest in art and wine with their pension funds, free from tax.

A number of reputable art schemes have been launched to tap into the demand. Just before he died last November, Lord Hanson, the businessman, launched the Fine Art Fund, which manages a portfolio of old masters and modern art for wealthy investors. ABN Amro, the investment bank, is putting together a “fund of art funds” in conjunction with Seymour.

Art schemes are not just aimed at the wealthy. The Arts Council recently set up “Own Art”, a scheme that offers interest-free loans of up to £2,000 when you buy contemporary art from designated galleries.

Investors are usually encouraged into the art market by the promise of stellar returns.

Charles Saatchi, the art investor, recently sold Damien Hirst’s famous pickled shark — entitled The Physical Impossibility of Death in the Mind of Someone Living — for £6.25m. It was bought for £50,000 in 1991 — an average annual return of 45%.