Seasons greetings. We thought you might like to see what are the items, we at Pension Life, would like for this Christmas and the New Year.
No.1 We would like to see that HMRC implement a thorough Due Diligence strategy.
No.2 At Pension Life we feel that the Pensions Regulator’s (tPR) due diligence is also a very important requirement for pensions.
No.3 . The government needs to prosecute known pension scammers and give them maximum prison sentences to send out a clear message of “zero tolerance” of pension scams.
No.4 Toxic Unregulated Collective Investment Schemes commonly called UCIS to be investigated and “toxic” warnings to be issued. UCIS are not allowed to be sold by regulated advisers – e.g. Premier New Earth sold by (among others) Holborn Assets.
No. 5 Sanctions for ceding providers who handed over thousands of pensions in a negligent/box-ticking fashion.
No. 6 We at Pension Life want the Government to take an active interest in pension scams with immediate effect.
No. 7 A dedicated task force to be set up in the coming year.
That’s the Pension Life Christmas Wish List. If you would like to talk to us about pension matters we are always willing to listen. Check out other blogs on this topic:
make a wish; make a list: make a pension wish list!
Pension Life is still dealing with so many victims of scams and scammers. None of the Pension Life wishes published in December 2015 have come true. In the intervening two years, thousands more people have lost part or all of their pensions – and the scammers are all still out there, scamming away merrily.
Maybe the next two years will see some real change? We at Pension Life certainly hope so. Because things cannot continue like this – too many lives are being ruined. The wish list is as valid and urgent now as it was in 2015.
No.1 HMRC to do some basic due diligence before registering pension schemes.
This has to be at the top of our pension wish list – whether for Christmas, Easter, or on May Day! Since pension simplification in 2006, HMRC has done zero checking on a scheme before registering it. They rely on the principle of “self certification” which means that if the person who registers the scheme doesn’t actually admit that it is being set up fraudulently, then HMRC assumes that the scheme is not being set up fraudulently. In fact, HMRC says that even if they had asked the question “are you setting this scheme up fraudulently” the answer would always be “no” irrespective. Interestingly, the same principle does not appear to apply to either the victims or the ceding (original) pension providers as they are supposed to do their own due diligence to establish whether HMRC has “inadvertently” registered a fraudulent scheme.
The 6th of April 2006, or A day as it is often called, was the date on which the then government simplified pension setup in relation to the tax relievable contributions and the assets in which pension funds could be invested. The intention was to simplify pensions going forward and de-clutter the complicated pension legislation set up by previous administrations. However, evidence suggests the opposite happened, leaving people open to losing their pension entirely or in part. This is especially the case for QROPS, which were introduced as a result of A Day. QROPS allowed unqualified offshore advisers to advise on very complex UK pensions with tragic results. Although simplification started in 2006, a detailed understanding of all the different pension rules that existed before that year is essential. People who joined pension schemes before 1987 or 1989 or 2006 may well have important protections that could be lost through the negligence of an incompetent adviser.
So, in the course of simplifying the pension process the government has left a lot of pension holders vulnerable to pension advisers who are not regulated, or qualified correctly. HMRC now need to implement new criteria for registration of pension schemes.
Currently, there is no list of HMRC registered schemes available to the public. This is something that is desperately needed and it needs to report the regulatory status of each scheme.
To suggest that an ordinary citizen without a background in finance and pensions should do ‘their own due diligence’ is downright ridiculous. Most ordinary people wouldn’t have a clue what to do or what questions to ask. And even if they did, they wouldn’t understand the answers. The best thing to do is to ensure a properly regulated and qualified financial adviser is used before making any changes to pension arrangements. However, in the UK, this advice would not be free and a charge would be made for it. The fraudsters would be offering “free” or “low cost” advice which would be deducted from the transfer – and this is why so many victims are conned.
If an ordinary citizen were to attempt their own Due Diligence they would first need to check if the adviser is regulated. Adviser regulations depend on what they are advising on – be it pensions, investments or insurance. So while an adviser could claim to be regulated, they may not be regulated for the service, product or scheme they are advising on.
The experience and qualification of the adviser is also a very important aspect of due diligence. Unfortunately, glowing testimonials are not sufficient. There is no one-stop resource in which you can be fully confident about the information you get on the adviser.
One simple example of an obvious scam is the company “occupational” pension scheme. If an occupational pension is offered, a transferee needs to be an employee. Bear in mind the reason so many scammers set up schemes as “occupational” is that an occupational scheme with less than 100 members comes under the radar of regulatory scrutiny. In other words, the organisers and promoters of such schemes can get away with setting up fraudulent schemes. So many scams involved occupational schemes since 2010 – from Ark to London Quantum (both placed in the hands of independent trustees Dalriada by the Pensions Regulator). Sometimes, the sponsors of these schemes actually existed; sometimes they didn’t. Rarely had they ever traded or employed anybody. And of course, neither HMRC nor tPR checked this. Anyone being offered a transfer to an “occupational” scheme when they are not genuinely employed by the employing sponsor of the scheme should be extremely wary.
No.2 The Pensions Regulator (tPR) to do some basic due diligence before registering occupational pension schemes.
Also near the top of our pension wish list, is the fact that we want a good, strong and effective pensions regulator – not a chocolate teapot. The Pensions Regulator(tPR) seem to be reactive rather than proactive. The general public are not able to contact anyone at tPR. tPR doesn’t declare what due diligence they do before registering occupational schemes (in fact it is pretty hard to speak to them at all and they don’t answer emails). Parliament gave tPR independence and it appears they are answerable to nobody. They do intervene in some cases and place suspicious schemes in the hands of independent trustees, but there is no evidence that they do anything to prevent scams from getting off the ground in the first place and only take action once hundreds of victims have lost their pensions.
No.3 Known pension scammers to be prosecuted and given maximum prison sentences to send out an urgent message of “zero tolerance” of pension scams.
As far as we at Pension Life know, there are very few instances of scammers being jailed. Known pension scammers are still out there on the streets, having scammed hundreds/thousands of victims out of their pensions and are in the process of scamming hundreds more every week. The same old same old worthless “investments” are still being peddled and nothing is being done to clean up this toxic trade which obliterates so many pensions collected over years of work in the hope of a secure retirement.
No.4 Toxic UCIS’ to be investigated and “toxic” warnings to be issued
The FCA will not allow regulated advisers to sell Unregulated Collective Investment Schemes (UCIS) to anyone other than professional investors. The selling of them by unregulated advisers is actionable by the FCA. The FCA does issue warnings about schemes such as these but their followers are only people working within the financial investment industry and it is only after the investments are made that many of the public become aware of these toxic investments. The general public would not be familiar with the FCA and what it does – as only the industry looks at their website, generally.
Pension Life would suggest that the FCA reaches out to the public and ensure that toxic investments are publicly named and shamed through mainstream media. The problem is that neither the regulators nor the police authorities do anything to stop known high-risk “dodgy” UCIS’ – let alone blatant investment scams. This is especially true of funds such as Blackmore Global and Trafalgar Multi Asset Fund.
No.5 Sanctions for ceding providers who handed over thousands of pensions in a negligent/box-ticking fashion.
Sadly, the very institutions in whose hands the retirement interests of the British public are placed are the worst at admitting liability for handing over £billions haphazardly to obvious scams without any due diligence. All the big names – from Aviva and Prudential to Standard Life and Scottish Widows – were hopelessly inept from 2010 to 2013 and did no due diligence to prevent victims’ pensions from getting handed over to the scammers.
No.6 Government to take an interest in Pension Scams
To all intents and purposes, the government is doing absolutely nothing to prevent pension scams, toxic pension investments, unregulated advisers and non-compliant schemes. As to why the loss of billions of pounds of pension scheme funds should not merit the interest of the government, remains a complete mystery.
The government claims to be “aware” of pension scams and pledges to treat the observation and “monitoring” of this massive-scale fraud as if it were a spectator sport. Iain Duncan-Smith promised to set up meetings with Ark Class Action members and senior government ministers in 2014, but then reneged on his promise. Ros Altmann simply refused to meet the Ark Class Action at all and instructed the DWP security guard to order them off the premises.
No.7 DEDICATED TASK FORCE
As a matter of the utmost urgency – no more messing around and pretending/lying/hiding – the government needs to set up a specialist task force to pull together regulation, policing, public information/warnings and a tax amnesty for victims of pension liberation fraud. It is now irrefutable that the Scorpion Campaign has failed; HMRC’s Project Bloom has failed; the FCA has failed; tPR has failed; the government has failed; ceding providers such as Standard Life, Aviva etc., have failed; Action Fraud has failed; the National Crime Agency has failed. Failure is no longer an option and the specialist task force needs to take over and get this disgraceful mess sorted once and for all.
LETTER TO PRUDENTIAL’S CHAIRMAN RE TRANSFERS TO PENSION SCAMS
Dear Mr. Manduca
As you are the Chairman of Prudential, and in light of the recent POS determination in respect of a Capita Oak victim’s transfer out of Prudential and in to a scheme which was clearly a pension liberation scam, I feel it is important to bring to your attention the significance of the Ombudsman’s decision for Prudential, dozens of other ceding providers, and for the thousands of victims of pension liberation fraud.
The Pensions Ombudsman feels there should be a distinction between the culpability/negligence of transfers made by ceding providers pre-tPR Scorpion campaign and post. I disagree very strongly and believe that if you allow this precedent to impact on the defrauded members of Prudential, this will also allow other ceding providers (your competitors) to escape responsibility for failing the thousands of members who have fallen victim to scams such as Capita Oak. This will impact severely on the credibility of not just Prudential but the whole industry and Britain’s ethos of saving for a pension.
The Pensions Regulator was issuing warnings about pension liberation fraud back in 2009. But in 2010/11, Prudential allowed dozens (at least) of transfers into Ark. Following tPR’s action (placing the six Ark schemes into the hands of Dalriada in May 2011), and a high-profile High Court ruling by Justice Bean which declared Ark to be a “fraud on the power of investment”, Prudential do not appear to have improved their due diligence at all.
HMRC state that “members and pension providers would have been aware of warnings/tax consequences in early 2012 (to pension liberation scams) as there were sufficient warnings and publicity available within the public domain from regulator websites, such as HMRC’s, the Pensions Regulator and the Financial Conduct Authority and a number of pension provider websites.”
And yet, in 2012/13, Prudential transferred at least 28 members’ pensions totalling more than £829k to the Capita Oak pension liberation scam. Around half of these were post Scorpion. (Scottish Widows, by comparison, transferred more than £750k into Capita Oak and half of this was post Scorpion.)
Also in 2012/13, Prudential transferred at least £383k to another pension liberation scam: Westminster. Most of this was post Scorpion. Prudential was beaten only by Scottish Widows who transferred more than £485k to Westminster – all of it post Scorpion.
In none of the transfers did Prudential seek confirmation that the members were genuinely employed by the sponsors of Capita Oak and Westminster. Had they done so, they would have found that both schemes had the same spurious “employer” (a non-existent company in Cyprus) and the same administrator: Imperial Trustee Services Ltd.
Prudential also failed to spot that both these schemes’ transfer administration was handled by Stephen Ward’s company Premier Pension Transfers Ltd at 31 Memorial Road, Worsley (with Ward’s Spanish firm Premier Pension Solutions SL being a tied agent of AES Financial Services Ltd, an FCA-regulated firm). A little more gentle digging with a very small spade would have found that Ward was the principal promoter and administrator for Ark.
In researching the Ark, Capita Oak and Westminster members’ files, I can find no evidence that Prudential did any due diligence at all in respect of any of the transfers. Prudential asked no questions of the members or of the administrators of the schemes. Prudential asked for no copies of the trust deed or the scheme accounts or evidence of the sponsoring employer. There is no evidence in my possession that Prudential’s transfer due diligence improved at all post Scorpion.
In response to one of my complaints to Prudential in respect of a transfer to Ark, Prudential’s Customer Relations Specialist Yvonne Kewell wrote on 7.3.15: “I can assure you that all appropriate checks were done before we transferred the fund. We followed the correct process as required at that time”.
If Prudential’s “appropriate checks” and “correct process” between 2010 and 2013 were to fail to heed tPR’s warnings as far back as 2009 and beyond; ignore advice widely available in the public domain in early 2012 (according to HMRC); neglect to adhere to the Scorpion checklist in 2013, then what possible faith can the public have in Prudential or indeed the rest of the industry?
To my knowledge, Prudential have transferred well over £2m in members’ funds to pension liberation scams (and that’s just the ones I know about). Operated by the same scammers. In the same manner. To the same effect for the victims: poverty in retirement and crippling tax liabilities which may result in homelessness.
Prudential’s Ms Kewell’s concluding statement reads: “I hope my letter explains our position”. If Prudential’s position is that it is acceptable to fail its members and ignore warnings/advice widely available in the public domain over a four-year period, then perhaps that redefines the term “customer relations”?
Prudential has a once-only opportunity here to emerge from this series of debacles as a shining example of how a leading pension provider should respond to valid complaints of negligence. If Prudential sets a conscientious example and compensates the victims voluntarily (notwithstanding the POS determination above) then all the other providers will have no option other than to follow suit.
I have thrown down the gauntlet. I look forward to your early response. You and Prudential can either emerge as a hero or a villain since I can assure you there is a determined and highly-organised campaign to bring ALL negligent ceding providers to justice in respect of negligent transfers to pension liberation scams. With a compliance and legal team the size of Huddersfield, I sincerely hope that Prudential will now elect to become a hero amongst the depressing tide of ceding providers who have sought pathetically to justify their failings in thousands of negligent transfers to obvious scams.
Regards, Angela Brooks – Chairman, Ark Class Action and Pension Life
www.pension-life.com
toCapita Oak pension scam: hundreds search for pensions they transferred after cold calls.
In a special You and Yours, we investigate a web of companies that sold millions of pounds of pension investments to hundreds of people – and has left many of them desperately trying to find out where their money has gone.
STORE FIRST/CAPITA OAK/IMPERIAL TRUSTEES AND VARIOUS SIPPS
Shari Vahl – BBC Radio Four You And Yours 20.10.2014
Transcribed by Angela Brooks, Chairman – Ark Class Action 20.10.2014
(comments in bold by AB)
Store First is doing really well. Next year it is expected to open more of its self-storage warehouses. It has celebrities such as Quentin Wilson recommending people invest in its storage units. Wilson claims: “I’ll be honest, I like it so much, I’ve got one myself.” The BBC has spoken to some of the people who sold the Store First investments. They told Shari how they lied, as well as forged documents and signatures to make sure that pension money was moved from secure schemes into Store First. One salesman said: “I feel kind of sick to the stomach that I had transferred pensions from an elderly lady who completely trusted me. I played with her dog. She made me cups of tea. She gave me biscuits. I built trust with her. And I don’t know if any of these people ever received any money.”
The BBC’s You And Yours team devoted the entire programme to the thousands of people who invested millions of pounds in this one company: Store First.
“I was asked by listeners to look into two Liverpool-based pension funds which had gone horribly wrong. These were Capita Oak/Imperial Trustees (300+ members with total transfers of at least £10.8m) and Henley/Omni Trustees. £20 million of pension money had been invested in Store First but around 500 people hadn’t received the returns they were promised and now they can’t get their money. The two pension funds were wound up in the High Court in 2015 and the judge described them as “dishonestly disadvantaging pensioners and sold on the basis of false representation”. From the start, it was clear from the people who came to us that those two pension funds that the court wound up weren’t the only ones driving huge investments in Store First. I’ve discovered another much bigger one marketed by the same Liverpool sales team, sending all the funds raised to Store First – a chain of storage warehouses.
Alan: “I don’t suppose I’ll ever see that £140k again. I don’t want other people to fall into the same trap. Which they might do now with the new pension rules”. Lolita: “This is the most appalling scheme I have ever heard of. It is awful. It is actually costing me money now. I would never have agreed to this.” David: “I’m annoyed with myself but I am even more annoyed with the people who took it off me. £66k and I want it back”.
“Those are three of the listeners that came to see us: Alan, David and Lolita. They were promised big returns on their pension investments and access to a quarter of it, tax free when they reach 55. They were told their money would go into Store First in 2012/2013. He engaged a sales company in Liverpool to sell people the idea of investing their pensions into his company. What the investors would get was a physical storage unit or pod and the money raised from renting out that pod (to people who wanted to store their stuff) is how they get the returns. Or that was the promise. The Capita Oak victims were also given non-repayable, interest free “loans” of 5% of the value of their pension transfers by a supposedly non-connected company registered in Gibraltar called Thurlstone.
Quentin Wilson featured in the advert claiming a “guaranteed 8% for the first two years and up to 10% in years 3 and 4”. This was due to rise to 12% by year 6. So even people with secure, generous, final salary pension funds moved them into Store First.
Alan, an ex postman, paid into the Royal Mail pension scheme: “I had about £144k. These people came to me and said they could put it in a SIPP (Self Invested Personal Pension) and I’d get guaranteed returns on it”. These people were the sales team based in Liverpool. He believed the claims. “I looked on the Store First website and they were predicting the same thing. And then this guy Quentin Wilson doing a video about how it was the fastest growing market in the UK and predicted 85% profit in six years”.
Alan and hundreds of others like him were really interested and excited by this offer. Interest rates on savings were so low and they needed money. The salesmen said they had “frozen” pensions from their old jobs just sitting there. Lolita also took one of these cold calls from Jackson Francis – the Liverpool sales team. We’ve obtained a copy of the script they used for the phone calls and it shows the cold callers described themselves as “pension specialists”. Lolita was 36 when she signed up so she is much younger than Alan and she had £20k in a pension pot from her old job. Jackson Francis asked if she would be interested in taking control of that fund and she said yes, she would be prepared to re-invest it somewhere so that it would be working for her and give her a good pension. So she allowed Jackson Francis to transfer her old pension into a SIPP (really only suitable for people with lots of money to invest).
David Griffiths did the same thing with his pension which had taken 20 years to build up working as a van driver for the Birmingham Post and Mail. A salesman visited him and gave him a glossy booklet and told him it was a very good investment and many people had had their money back on it and the website looked kosher so he decided to go with it.
For a lot of people the promise of a tax-free lump sum was a big part of it and they could have got that out of their old pension schemes, but they didn’t know that and Jackson Francis didn’t tell them that. Other people just wanted to make their money work harder for them and get better returns. This has been researched by BBC Radio 4 for more than a year after being contacted by desperate people who had not received their lump sums at 55, couldn’t contact the Liverpool sales team and were very worried.
Several former Jackson Francis employees started to get in touch with the BBC and started to reveal what was really going on inside Jackson Francis. They believe that Alan, Lolita and David and hundreds of others were lied to and defrauded. One salesman said that the promise of getting 25% of the pension at age 55 was really the main bait. “A lot of people, especially over 55, were struggling and that tax-free lump sum would have helped them out”.
People who go into a SIPP are strongly advised to get independent financial advice. The cold callers described themselves as “pension specialists” and offered a free pension review and Alan thought he was getting good advice.
Under the rules, you can’t take out any part of a pension under the age of 55, and if you do move your pension pot, you should have a third party company regulated by the FCA in the middle to manage the pension pot for you. So who managed the Store First investment? A company in Leicester called Berkeley Burke (SIPP administration company) – unrelated to Store First and Jackson Francis and wasn’t paid by either of them but took on the majority of Jackson Francis clients – hundreds of them – and handled their investments into Store First.
Berkeley Burke was happy to facilitate the transfers provided the clients signed to say they recognised the investment was high risk. After a few months, Berkeley Burke wouldn’t take any more Jackson Francis clients unless those people had received independent financial advice. Jackson Francis approached an IFA called Keith Popplewell, experienced in pensions, who was paid to help them. They asked him to provide advice to their clients so he needed information from these clients but before he could give advice he needed Jackson Francis to do a questionnaire but he didn’t meet the people he was advising. He didn’t speak to them on the phone either. He just looked at the questionnaires returned by the salesmen and then wrote a financial report either recommending or not recommending they move their money into a SIPP.
This is where the allegations of fraud and forgery really begin. This is what one of the salesmen said about the so-called fact-finding questionnaires: “There was a series of boxes and you had to tick one. It went from low to high risk and we were told by our bosses that people needed to be at the higher end or there wouldn’t be a transfer. If the client didn’t want to be high risk, they were told they would have to leave the pension where it was. Another salesman reported it was more than just scaring people “When I was training I went out with one of the field agents. He filled in the form before he went into the client’s house and ticked the box to say the client did have an appetite for risk before meeting him. Clients did not see a copy of their reports. Keith Popplewell claims he never recommended anyone in a final salary scheme to transfer into a SIPP. Even clients whose reports said the pensions should not be transferred were still transferred and did not even see the report from Popplewell.
One salesman witnessed another salesman signing pensions transfer paperwork himself and filled in the fact-find questionnaire himself. Another salesman reported that this was routine and that the salesmen would sign the forms rather than the client. In other words, forging signatures. You would see them practising on a piece of paper until they got it right.
Jackson Francis was a “machine” that drove £100 million into Store First. The salesmen did not know about the level of commission paid by Store First. Over two years, Store First paid £33 million to a mysterious company called Transeuro Worldwide Holdings and it worked like this: every time an investment was received into Store First via the Liverpool sales team, Store First would pay Transeuro a commission of 30% or 46%. So when Alan put his £141k pension from the Royal Mail into a SIPP and that went into Store First, Transeuro was paid nearly £65k – 46% commission.
The government took Transeuro to the High Court to wind it up in the public interest after complaints from people who had been persuaded to move into two other pension funds also invested in Store First and millions of pounds are also missing from those pensions. Up until that court hearing, it was really hard to see who really ran Transeuro. It seemed to be based in Gibraltar and was shrouded in layers of nominee directors in the Caribbean and Central America and at the winding up hearing the court forced Transeuro’s solicitors to name the man in charge. That man is Michael Talbot who all the Liverpool salesmen believed was their boss. The man they described as having the big glass desk in the Speke office; the quiet man who hired and fired; the man with the chequebook.
But in a letter to the BBC from Talbot’s lawyers, he denied he ran the Liverpool sales operation or Transeuro Worldwide Holdings. He claimed his role was IT and databases and he told the BBC that at his garden gate in 2014. Talbot is 42, from the North of England and he used to be a nightclub promoter, married with two children.
Transeuro used £5m of the £33m they were paid to run the Jackson Francis operation and for buying in names of potential customers; they rented offices in Speke. Mike and Stuart would often roll up to the office in Ferraris and Rolls Royces, a Porsche, all owned by Store First. These offices were called Business First and Jackson Francis worked from there. Store First owned all the cars that the salesmen used to drive to visit clients and provided all the glossy brochures, and the product knowledge training for the sales team.
We can’t say that the investors have lost everything because they still are the legal owners of these storage pods. Quentin Wilson promoted the “exit strategy” as being able to “bail out at any time without cost and can sell to Store First who have a guaranteed buy-back scheme or you sell to another investor”. But Store First told one investor “on the fifth anniversary if you request for Store First to buy your pods back and if this is agreed then Store First have a further five years to complete the buy back”. And over that time you have to pay another five years’ fees and management costs. SF claimed it could organise an “in house” sale and sell the storage pods to someone else and make the original investor a profit of 25% but simultaneously offer a 25% discount on a new one. Why would anyone buy a second-hand unit for 50% more than a new one? It has been three years since Alan asked Store First to his sell his units and so far nobody wants them. Nobody has bought David Griffiths’ pods either.
BBC went to speak to Mike Burkey at Andrews Estate Agents in the Wirral and he said they had one on the market for £15k in February. They dropped the price in June to £9k as interest was minimal. The realistic price could be £5k and they charge a flat fee of £1k plus conveyancing fee of about £600. So after total fees of around £1800 the seller might walk away with £3.5k. Other estate agents tell the same story and one said they thought the investors had been “stung”. A major auction house had 9 pods for sale from the Blackburn site. The auctioneer started at £10k but there was not one single bid. No-one out of the 400 people in the room showed even a flicker of interest.
The original investors were shown a valuation by a chartered surveyor and the BBC asked him how he had calculated the market value and he said it was a sum based on how much rent the pod would generate. He was then asked where he got the rental figures and he said “Store First”. He was then asked whether he checked those figures to prove those rents were coming in and he said “no”. When the Capita Oak store pods were purchased in 2012/13, the solicitors used for the conveyancing – Metis Law – were specifically instructed not to get valuations for the pods they bought using £10m of funds from the Capita Oak members.
“As a matter of policy, Carey Pensions use a conservative valuation estimate for Store First storage units of 50% of the original purchase price in preparing annual SIPP reports”. This was a letter sent in 2015 to some Store First investors telling them their investment is worth half what they paid. When asked why the value of the investments had dropped so much they didn’t answer.
Store First claims it has 5,000 investors who have put £250 million pounds into Store First. Tom McPhail of Hargreaves Lansdown says the way these investments were sold was wrong because unregulated advisers were selling high risk investments with financial advisers signing off risk profiles that were inappropriate and then people buying into unregulated high risk investments and people who should never have been moved out of final salary schemes and unregulated investments shouldn’t be in the SIPPS at all in the first place.
The BBC tried to get in touch with the SIPP administrators Berkeley Burke, regulated by the FCA, but they didn’t respond. Carey Pensions did respond saying that they did do checks in line with FCA regulation and that they are happy. The Self Storage Association says that the figures that Store First are putting out are not viable and they got an independent report from Deloittes who confirmed the initial suspicions that the promised returns are unviable from a self storage business and there were two similar operations in Australia that failed and the investors were left out of pocket. There is very little, if any, market for re-sold units. Tom McPhail says there is very little avenue for compensation for the investors.
Quentin Wilson states he has asked Store First to remove the videos from their website and he has confirmed he has received no income from his pod.
For the benefit of all 300 odd members of Capita Oak, here is an email that was sent today to Downs & Co, the accountants acting on behalf of Christopher Payne, the director of the trustees Imperial. This email has been circulated to many Capita Oak members and other interested parties such as the police and the BBC who are preparing a documentary on the subject.
Hopefully it will not be too late to blow the whistle on this situation and rescue the members’ funds: https://pension-life.com/#!whistle/c13e7
Admittedly, the contents of this email raises more questions than it answers, but it does at least go some way to establishing how many members there are, how much in total was transferred and who the various parties were who received money from the transfers. What it does not yet establish is what the 10.14 million paid to Metis Law is now actually worth and how (or if) it can be recovered.
Dear Mr. Downs (info@downsandco.co.uk)
Referring to our earlier correspondence, will you kindly ask your client Mr. Christopher Payne the following questions:
1. A total of 10,810,301.57 was transferred in to Capita Oak from approximately 300 members and a total of 10,666,066.14 was paid out. This should leave a balance of 144,235.43 and confirmation is required that this is indeed the amount remaining in cash.
2. A total of 82,911.31 was paid out in “PCLS” payments and confirmation is required as to what these payments were and who authorised them.
3. The following “PCLS” payments were made and confirmation is needed as to who these people were and why these payments were made, upon whose authority:
-5,054.24 J Whyte
-8,854.53 G Rose
-21,875.72 W Daniels
-5,758.99 Mr Clemson
-5,286.32 Mr. Charlesworth
-17,231.51 Pamela Holt
-18,850.00 A Levitt
4. A total of 441,751.85 was paid to TKE Admin (of which Mr. Payne was a director). This was paid to TKE on 27 different dates between 12.11.2012 and 5.7.2013. Please explain what these payments were for and who authorised them.
5. Premier Pension Transfers were apparently handling the transfers but there is no record of any payment to them for their services. How were they remunerated and why were two administration companies involved and who appointed them?
6. A total of 10,140,598.27 was remitted to Metis Law between 11.20.2012 and 7.5.2013. Confirmation is required that Capita Oak now holds 10,140,598.27 worth of assets and exactly what income these assets are supposed to generate and whether they are unencumbered. Further we need evidence of title to these assets and a full explanation as to who authorised 100% of Capita Oak’s assets to be placed in illiquid property with very little liquidity remaining for transfers out.
7. An explanation as to how and by whom the Thurlestone “loans” were transacted, administered and recorded.
There will of course be numerous further questions which your client Mr. Payne will be required to answer, including why he has not contacted me or answered my calls. As I am sure you appreciate, as former and current director of Imperial Trustees, Mr. Payne is liable for any risks to Capita Oak and responsible for the members’ interests, investments and any non-compliant transactions linked to the pension, such as the Thurlestone loans of 5% of the value of the transfers.
In the case of Ark, professional independent trustees were appointed by the Pensions Regulator and the majority of the assets were eventually recovered. However, this is not the case for the Capita Oak victims – who are extremely distressed – and therefore we are all relying on the full cooperation and disclosure by you and your client Mr. Payne.
Your early response will be much appreciated. As I am sure you will be fully aware, this situation is being closely monitored by the police and the BBC, as well as the members and if you or your client Mr. Payne are unable to answer any of the above questions you must refer me to any other connected party who is in a position to do so. You will see that this email is copied to the Police, Store First and Metis Law.
Regards, Angela Brooks – Chairman, Ark Class Action
Pension liberation fraud has been reported widely in the press, on t.v. and on radio for several years. The Inside Out documentary showed how easily victims are scammed by the teams of scammers. The Ark Class Action, led by Angela Brooks, filmed part of this programme at the BBC studios along with a financial adviser and solicitor.
Interestingly, Andrew Isles, the accountant who helped design and set up the Ark schemes, took part enthusiastically in the filming. The BBC team did some secret shopping of their own, and uncovered another pension liberation scheme run by George Frost – former Chairman of Canvey Island Football Club. Frost’s scheme invested victims’ pensions in “truffle trees”.
Thousands of people have lost more than £500 million of their savings after being duped into taking part in unauthorised “pension liberation” scams. Experts say that the true figure runs into billions because many cases go unreported.
They also warn that next year’s relaxation of the rules governing how you can take your pension cash will provide a fertile breeding ground for fresh scams as fraudsters queue up to exploit the uncertainty around the new pensions regime.
Some of today’s victims fear they have lost their entire pension savings, while others say they have been driven to the brink of suicide.
The lure of pensions “liberation”
Savers were originally lured into transferring their pension pots by the promise of getting their hands on their retirement cash before the age of 55. However, many succeeded in “unlocking” only half of their pension pot, with the rest going partly into uncertain property investments, partly into cash and partly to the scheme’s promoters through hefty fees.
Savers were told that these schemes were legitimate but that was not true. Now many of the victims are facing financial ruin as they are being told to hand back the money they “liberated”, while Revenue & Customs is poised to slap on a tax penalty of 55 percent of the “unlocked” cash. In many cases, they simply do not have the money to pay.
The Ark schemes
Among the biggest “liberation” schemes were those created by Ark, a pensions consultant. These were marketed by financial advisers and so-called “introducers” in the UK and Spain. One of the main players was Stephen Ward, of Premier Pension Solutions (PPS), a Spanish-based company.
Angie Brooks, below, a former tax barrister, who is leading the class action on behalf of the Ark victims, says: “Mr Ward assured Ark applicants that it was lawful and tax-free and was approved by the Revenue and the pensions regulator. The Revenue registered the six Ark occupational pension schemes without checking for compliance. So did the pensions regulator. This understandably gave the Ark members the reasonable illusion that the schemes were lawful and approved by the UK government.”
The registration procedures have now been changed. She says that between September 2010 and May 2011, £25 million was transferred from personal and occupational pension plans into Ark schemes, for fees of up to 10 percent of the value of the transferred pot. More was transferred after this, bringing the total to £27 million.
PPS teamed up with AES International, a firm regulated in the UK, which gave PPS a tied agent agreement to operate in Spain under its regulation (though this did not authorise PPS to carry out pension transfers). PPS carried out at least 160 Ark pension transfers, totalling £10.7 million, with Ark taking a 5 percent cut of each transfer, PPS pocketing a further 3 per cent, as well as a slice of the Ark money, and AES receiving a 12.5 percent slice of PPS’s cut.
The schemes “unlocked” money by arranging for members to make reciprocal loans, worth about half the value of their pension pot, to each other. Many believed they would not have to repay these loans, known as Maximising Pension Value Arrangements (MPVA). The remaining half of their pension pots, after deduction of hefty charges, was partly held in cash and partly used to buy plots of land or timeshares.
Alarm bells started to ring in December 2010 when the Revenue expressed “concerns” over the lawfulness of the schemes, though it was not until May that they were suspended and a trustee — Dalriada — appointed. It embarked on litigation that resulted in the Ark schemes being declared invalid and the reciprocal loans judged to be “unauthorised payments” in the High Court in December 2011.
The cost to Ark victims
The judge’s ruling delivered a twofold blow to Ark members. First, Dalriada was enabled to demand back the money they had received as loans under the schemes. Second, since the loans were “unauthorised payments” the Revenue was entitled to levy a penalty charge of 55 per cent on these sums. The Revenue has not decided whether to tax the donors or recipients.
Dalriada has managed to recover more than £6 million of the £7 million which Ark spent on property investments. Sean Browes, of Dalriada, adds that it also has £9 million of Ark money in a bank account and is seeking to unscramble the £10 million of reciprocal loans. However, this has come at the cost of £800,000 in Dalriada’s fees and £1.9 million in legal costs.
According to Ms Brooks, Mr Ward has, since the suspension of Ark, been linked to pension liberation schemes which have attracted hundreds of fresh customers — something he denies.
He says: “PPS provided information regarding the Ark schemes in good faith based on the information and opinions provided by Ark and our own independent research. We included statements that independent financial advice should be sought and a number of people who did take advice found the experts they consulted agreed with our understanding of the position. We believe the damage has been caused primarily by the Revenue’s failure to take action when it first became aware of the schemes and by Dalriada’s fees.”
Sam Instone, the head of AES International, says: “We had nothing to do with the Ark scheme and we earned a negligible amount from our tied agency with PPS. We have no legal responsibility for what has occurred here.”
Craig Tweedley, who created the Ark schemes, says: “We took extensive advice about the validity of these schemes before launch. We were concerned when we learned that some introducers were claiming that the MPVA loans did not have to be repaid when a key part of our scheme was that they should.”
Dalriada says: “The Ark schemes were very unusual and have taken some time and, unfortunately, money to unravel. The members of these schemes have been scammed.”
Anyone with information about these pensions “liberation” schemes is invited to contact mark.atherton@ thetimes.co.uk
Be on your guard against scams
Ahead of next year’s changes to the rules, one aspect of which means those aged 55 or over can take money from their pension, the scammers are gearing up to part you from your cash. Be on your guard
If someone promises to help you take money from your pension pot before the age of 55 it is almost certainly a scam: you could lose the lot
Even if you are over 55, do not deal with anyone targeting you by phone, text message or approaching you in person. Beware the words: ‘free pension review’
Do not deal with anyone who is not registered with the Financial Conduct Authority for pension transfers
An Ark victim has suggested it would be a good idea to do a full update so everybody knows the entire story so far. I agree that’s a good idea so here is a brief outline of where we are and how we got here. If anyone has any questions or wants further information the Ark Class Action can be contacted on arkmarazion@gmail.com.
2010: a group of investors got together and purchased a plot of land in Larnaca, Cyprus for 1 million pounds. With the intention to try to turn it into a golf course. Only they needed more land and more money. So they consulted a group of “experts” who came up with the idea of attracting investment by starting a pension scheme. Now, pensions are supposed to be LOW RISK. And diverse. Speculative land development projects are NOT a good idea for a pension (due to being high risk). Financial advisers are supposed to know this and are not supposed to advise their clients to put their hard-earned pensions into a scheme based on a potentially worthless piece of land.
OFFICIAL TIME-LINE 2010: Ark was formed by a group of “experts” and the worthless piece of land originally bought for 1 million was sold to Ark for 4 million.
August 2010: Ark’s “Master Pension Schemes” (MPS’s) were aggressively promoted and sold by a clutch of financial advisers in Spain and the UK using pension liberation (also known as pension cracking or unlocking) in a scheme described by the promoters as “not traditionally available” (in other words unlawful). This “unique” process was called Maximising Pension Value Arrangements (MPVA) and facilitated a loan to the participant of up to 50% of the value of the transferred pension (after deduction of fees which ranged from between 5% and 15%).
2010 to 2011: The Ark schemes began advertising and were sold through newspaper ads, websites, calls from financial advisers, seminars and advertisements posted on toilet doors.
May 2011: The Pensions Regulator were actively shutting down pension liberation scams such as Ark and placed the six Ark schemes in the hands of Dalriada Trustees and the whole lot was suspended. The Regulator was actively promoting its “Scorpion” campaign to warn people about the dangers of pension liberation fraud. http://www.hmrc.gov.uk/pensionschemes/investments-tax.htm. HMRC also set up “Project Bloom” to help stop these scams due to the fact that the victims stood to lose their pensions AND get 55% plus tax bills on their pension loans. http://www.hmrc.gov.uk/pensionschemes/liberationud.pdf
December 15th 2011: Justice Bean ruled in the High Court that the Ark schemes (MPS’s and MPVA’s i.e. pension transfers and reciprocal loans) were a “fraud on the power of investment” and that the loans constituted “unauthorised payments” (i.e. taxable at 55%). The ruling can be read here – note Clause 57: http://www.professionalpensions.com/digital_assets/3826/4568_001.pdf
December 20th 2011: Marazion was incorporated in Nicosia, Cyprus.
June 2012 Evergreen Pension Scheme commenced trading – making a loss in the first year and attracting 426 members
August 2012 Marazion started selling five-year term loans and corresponding five-year “lock ins” to Evergreen pension transfers
19th November 2012 HMRC suspended Evergreen from their QROPS list http://www.evergreentrust.co.nz/uk-pension-transfers/
December 2012 Dalriada published the first year’s audited accounts (for the period May 2011 to May 2012) for the six MPS’s: Cranbourne Star, Tallton Place, Grosvenor, Lancaster, Portman and Woodcroft Dalriada’s audited accounts for the six Ark schemes for the first two years can be found here: http://dalriadatrustees.co.uk/ark/
September 2013: The Ark Class Action was set up to help inform the Ark victims and negotiate and appeal their tax liabilities so that these (together with their pension losses) can be reclaimed from the negligent financial advisers who sold the Ark schemes to the victims .
March 2014: HMRC finally agreed to confirm their full intentions regarding taxing the Ark loans.
April 2014: HMRC finally confirmed their intention to try to tax the loans at both ends i.e. 55% at the receiving end AND 55% at the making end. They also confirmed that Ark members who did not receive a loan would still be taxed at 55% for making a loan or intending to make a loan, and/or intending to receive a loan.
Between 2012 and 2014 (to date), some Ark members have received demands by HMRC to complete Self Assessment returns declaring the Ark unauthorized payments for tax purposes; some members have received demands for the tax; some have received nothing at all, but HMRC have confirmed that the letters and demands are now on their way. However, there really has been no consistency in their approach to the whole Ark matter, but they do now appear to be getting their act together.
June 2014: Evidence regarding the Marazion/Evergreen pension liberation fraud was handed to the British authorities in London.
June 2014: HMRC has issued a deadline of 30th of June for return of the 10 point questionnaire required in respect of the Ark loans.
ARK PENSIONS DISASTER CLASS ACTION – MISSION STATEMENT
For members of the Ark Pensions schemes and any other similar schemes involving MPVA (Maximising Pension Value Arrangements) or PRP (Pension Reciprocation Payments) or Pension Liberation (releasing a proportion of your pension before the age of 55).
THE MISSION: There are a number of challenges facing the Ark Pensions victims. What they want and need is clarity, honesty, transparency, justice and action to get their pensions back and be put into the position they should have been in before their original pensions were transferred to Ark (or any other similar pension liberation schemes).
The Ark Pensions Class Action is taking up all the challenges required to do this and give the victims back their financial security in retirement. To do this, and more, there are five distinct but inextricably-linked aspects to the mission:
THE GOVERNMENT
DALRIADA TRUSTEES
HMRC
FINANCIAL ADVISERS WHO SOLD THE ARK SCHEMES
JUSTICE BEAN’S RULING (INTERPRETATION AND APPLICATION)
THE GOVERNMENT
The Government’s Pensions Regulator investigated the Ark schemes and made a full report detailing the areas where it did not feel the schemes complied with Pension Regulations: http://www.thepensionsregulator.gov.uk/docs/DN2116109.pdf.
When I say “full” I mean “full-ish”. The Pensions Regulator has blanked out the bits it doesn’t want the public to see.
The Pensions Regulator appointed Dalriada Trustees to take control of the Ark schemes and they were suspended in May 2011. Dalriada has been recovering the original investments made by the Ark schemes and have recovered the majority (despite originally declaring them to be worthless). They are now taking steps to recover the loans made to the Ark members.
The government is responsible for HMRC who are trying to tax the Ark loans even if they are repaid.
The government department – The Financial Conduct Authority – refused to take action against the financial advisers who sold the Ark schemes, saying that it was “not within their jurisdiction” – and anyway they get to pick and choose which cases to pursue.
The government is responsible for:
Pensions being frozen and 10% of the original Ark assets being spent on fees by Dalriada in the first two years
Secrecy over the who/where/what/how the Ark disaster was set up, investigated and “worked”
Failure by the FCA to take action against the negligent financial advisers who sold the schemes in the first place
Failure by HMRC to decide clearly how and where they intend to tax the loans at 55% despite having had three years to do this and honour their own “Taxpayers Charter” (help and support taxpayers to get things right). The loans could be taxed in three different places (depending on what HMRC can get away with).
Apathy. So far, only three MP’s out of the entire House of Commons have taken up their constituents’ cases. George Osborne has completely ignored the matter. David Gauke, Treasury Secretary, has brushed the matter aside in a “bothered?” letter without even asking about the welfare of the Ark victims or offering to do anything to help.
DALRIADA TRUSTEES
Dalriada were appointed by the Pensions Regulator in May 2011. The pensions remain frozen. After numerous bouts of legal action, two sets of audited accounts were sent out seven months after the end of the first two financial years. No news as to when Dalriada’s work will be concluded. Bulletins and updates sent out infrequently and Dalriada staff not great at returning Ark victims’ calls and emails. Some Ark victims have still heard absolutely nothing from Dalriada.
In the first two years since their appointment, Dalriada charged £665,039 in fees, spent £1,633,371 on legal fees and £47,695 on audit fees (10% of the total fund value). They refuse to declare how much has been spent in year three, stating that the Ark victims must wait until audited accounts are released in December 2014.
In three years, Dalriada have failed to resolve with HMRC whether the Ark loans are taxable or repayable. And failed to inform the members that – actually – they are both. Dalriada have been meeting with HMRC for some time, but claim it is nothing to do with them if HMRC tax the loans (just as HMRC are claiming it is nothing to do with them if the taxed loans are forcibly reclaimed by Dalriada).
There is still no clear idea of how safe the Ark pensions are. £11.8 million of Ark victims’ cash is held on deposit at Barclays Bank earning pitifully-low interest. (Let’s not forget that Barclays are being investigated by the Serious Fraud Office over a shady £322 million Qatar deal and have been fined £50 million by the FCA – so why chose Barclays?)
Dalriada are making a “Beddoe” application for court directions as to how to recover the Ark loans. They have stated they will not agree to Angela Brooks, representing numerous Ark victims, being present at the private hearing because the hearing is “private” and that she is an “unconnected party”.
Dalriada need to answer key questions about the future of the Ark pensions. Legal and financial professionals fear the “fee-earning machine” could roll on for years until there is nothing left of the pension funds. Unless Dalriada are challenged. And vigorously.
In the three years since Dalriada took over the Ark pensions, HMRC have done nothing – I repeat, NOTHING – to clarify the taxation of the Ark loans. They did not even sit down and have a meeting with “pensions experts” until the end of March 2014 i.e. more than two years after Justice Bean ruled in the High Court that the loans constituted unauthorised (i.e. taxable) payments.
It must be remembered that if HMRC had not registered the Ark schemes in the first place, the original pension providers would not have made the transfers and the Ark disaster WOULD NEVER HAVE HAPPENED. HMRC have since publicly stated that they were going to put an end to the “register now, ask questions later” negligent and sloppy approach. But they lied. Angela Brooks applied to register a pension online at the HMRC website, using her own name and private address in Spain at the beginning of January 2014. Two weeks later she received her HMRC-authorised pension certificate. No questions asked.
HMRC have informed the Ark Pensions Class Action that:
55% tax is payable at the receiving end or at the making end of the loans (the funds). Or both.
Dalriada have said that HMRC will also be taxing the members themselves for “making” the loans (even though they had nothing to do with it).
Even Ark members who did not receive loans will be taxed at 55%.
HMRC refused to be joined in the High Court proceedings in December 2011 because “it wasn’t a tax case”.
They declined to be bound by Justice Bean’s ruling. But are now relying on it.
They want all Ark members to complete tax returns so that an appealable decision can be issued and then the members have to appeal the tax before the tax tribunals – knowing full well that this is a lengthy, expensive and stressful process. But HMRC have deep pockets, and they don’t care.
If the Ark members don’t get an appealable decision, HMRC will issue a determination with no appeal.
Some Ark members have received demands to complete tax returns. Some haven’t. Some have already paid the tax “on account”. Some are so worried they can barely function.
HMRC state that the loans are still taxable even if they are repaid.
HMRC have to be taken to task. They have blatantly contravened their own “Taxpayers Charter”. They have not lifted a finger to sort out a clear and fair way to deal with this unclear and unfair situation which is inflicting so much stress, anxiety and potential financial ruin on so many Ark victims.
The tax demands have to be vigorously challenged and appealed in the tax tribunals and some sort of justice as well as closure sought to end the misery of the past three years.
FINANCIAL ADVISERS
Let’s get one thing 100% straight right from the start. Financial advisers have one thing and ONE THING ONLY to sell: financial advice. Not halal chicken or horse-meat burgers; not snake oil or penis enlargement cream. Pure and simple financial advice. And it is an easy enough job because all you have to do as a “financial adviser” is ask your clients three basic questions:
What is your risk profile?
What is your risk profile?
What is your risk profile?
Then all the financial adviser has to do is provide the client with three crucial bits of information:
Here’s a copy of my professional indemnity insurance
Here’s proof of my authorisation/regulation
Here’s my fee for your approval (plus anybody else’s fees in the “supply chain” for this transaction)
It is worth defining “risk profile” in order to establish just how easy it is to get it right:
First, ask the client if they are low, medium or high risk (in other words, how happy are they to lose their investment if things go tits up). If the investor says “very happy” – refer to a psychiatrist
Second, explain the underlying investment in plain English without any gobbledygook (i.e. property or shares or precious metals or an outsider in the 3.30 at Kempton Park)
Third, outline how the investment will be spread between a variety of different types and class of fund (after all, only a complete moron would put 100% of his client’s money into something as outrageously risky and toxic as a “death bond”!)
However, if – despite following all the basic, not-rocket-science rules of how to be a competent and successful financial adviser – things do go pear shaped, then the client can go back to the financial adviser and complain and ask for compensation and redress.
The good, professional, competent, conscientious, properly regulated and insured financial advisers will move heaven and earth to help, assist and support the aggrieved client and make every effort to resolve an investment which has turned sour. If the problem is not resolvable and the client ends up either losing money or gaining an unforeseen tax liability (or both), then the financial adviser will notify his professional indemnity insurers and ensure that the client is compensated.
As with all professions, however, there are the good, the bad and ugly. Unfortunately for the Ark members, they have been victims of financial advisers who are not only bad and ugly, but downright cowardly. In the face of their monumental cock ups, they have shown that not only do they have no conscience but they have no balls either.
The financial advisers responsible for the Ark disaster will be brought to justice. Many of the Ark victims have described them as “dead men walking”. However, the Ark Pensions Class Action wants them kept alive and healthy so that they can face both criminal and civil proceedings for justice and compensation for their victims.
HIGH COURT RULING
In December 2011, Justice Bean declared (Clause 57 of the ruling) that the Ark Pensions loans were “unauthorised payments” (i.e. taxable at 55%). In the same clause, he also ruled that they were “not unauthorised payments” (i.e. not taxable at 55%).
About as clear as mud. Either way, HMRC declined to be joined in the proceedings (or, to put it in layman’s language – they couldn’t be bothered to turn up). Their excuse was that “it wasn’t a tax case” – although they knew that tax was central to the issue. They also declined to be bound by the ruling – although they are subsequently relying on the ruling that the loans WERE unauthorised payments and ignoring the bit that says they WERE NOT unauthorised payments.
Many highly-qualified and experienced legal and tax professionals think Justice Bean was wrong. Equally, James Bulger’s family thought Justice Bean was wrong when he sentenced Jon Venables to two years in prison for distributing child pornography, and stated it was important to protect Venables’ secret identity.
However, the judge did say one very significant thing which seems to have escaped HMRC and that is at Clause 53 where he quotes the case of DCC Holdings v HMRC heard by Lord Walker of Gestingthorpe and a bunch of other judges who agreed with him about the principles of interpreting and applying laws (also known as “common sense”):
“…the correct approach in construing a deeming provision to be to give the words used their ordinary and natural meaning, consistent so far as possible with the policy of the Act and the purposes of the provisions so far as such policy and purposes can be ascertained; but if such construction would lead to injustice or absurdity, the application of the statutory fiction should be limited to the extent needed to avoid such injustice or absurdity…”
To put the above into layman’s terms, this means “if the law is an ass, don’t act like a donkey”.
The Ark Pensions Class Action puts it to His Honour Justice Bean, HMRC, The Pensions Regulator, Dalriada Trustees, the Treasury Secretary, the Pensions Minister, the Chancellor, the Prime Minister, the Financial Ombudsman, the Pensions Ombudsman, the Parliamentary Ombudsman (and any other Ombudsman you can think of) that the following position is both unjust and absurd:
Dalriada will be reclaiming the Ark loans
HMRC will be trying to tax the Ark loans – at least once, if not twice or three times if they can get away with it
The tax on the loans (whether 55%, 110% or 165%) will be repayable even if the loans are repaid
Even those Ark victims who did not receive a loan will be taxed at 55% because they “intended” getting a loan
Even those Ark victims who didn’t receive a loan because they didn’t want one will be taxed at 55% because they “made” a loan (presumably in their sleep)
The Class Action will be calling upon all involved in this disaster to interpret the law justly, and with intelligence rather than with downright stupidity.
Battered, bewildered and furious, the Ark Pensions victims are gradually coming to terms with the fact that this will be a long and determined battle.
In 2011, when financial advisers (plausible, credible and slick) assured the victims their pensions would be transferred to a legitimate HMRC-“approved” scheme which would allow a tax-free lump sum of 50% – structured as an unsecured, low-interest loan, it was not surprising that so many people took up the offer. The offer didn’t come cheap, as there were fees of between 8% and 13% (sometimes more).
Stephen Ward of Premier Pension Solutions had been running seminars around the UK to promote the Ark scheme to introducers and victims alike and was responsible for a third of all the transfers into Ark – totalling over £10 million. He used his status as a CII Level 6 qualified former pensions examiner and author of the Tolleys Pensions Taxation Manual to lull the victims into a false sense of security.
Within a matter of months, weeks or even days, the Ark victims learned that the scheme had been suspended and placed in the hands of Dalriada Trustees. In the High Court in 2011, Justice Bean, declared the pension withdrawals/loans (called MPVAs – Maximising Pension Value Arrangement) as unauthorised payments and the whole scheme a fraud on the power of investment.
The Ark pension victims – 486 in total – now face repayment of the “tax-free” lump sums which are classed as loans. They also potentially face 150% tax on the loans, even if they are paid back. HMRC is trying to get the tax at 55% on the receiving end and the making end of the loans, plus 40% on the scheme itself. HMRC is also trying to tax those victims who did not receive a loan at all.
The tax is being vigorously defended – both by Pension Life and Dalriada Trustees. The Ark Class Action is asking parliamentary candidates to back a motion for a tax concession for victims of fraud. The victims want to ensure those responsible for this appalling situation are called to account and made to put the members back into the position they should have been in before their pensions were transferred to the Ark schemes and the loans taken out.
It is not going to be a quick or easy battle, but all the Ark victims are determined not to take this lying down – especially those who did not receive a loan but are being threatened with a tax liability just because “they intended getting a loan”.
During week commencing 19th June 2017, the victims will be challenging Dalriada Trustees in the High Court Beddoe proceedings. Dalriada will be asking the court for permission to use the Ark members’ funds to take legal action against them to recover the MPVA loans – around £11 million in total. If we fail to challenge the application successfully, it will be a race between Dalriada and HMRC to see who can bankrupt the victims first and make them homeless. HMRC claim the tax will remain payable even if the loans are repaid.
