Tag: Pension Scams

POST OFFICE V LIFE OFFICE

The Post Office scandal is routinely referred to as being the worst betrayal of justice in British history. It is hard to argue that there could be anything worse than what the liars and fraudsters at Post Office Limited and Fujitsu (and their various lawyers) did to hundreds of innocent sub postmasters. But the Life Offices – including Utmost International – and many of the brokers with whom they have terms of business – certainly come a close second.

The Post Office scam was led by Paula Vennells – an ordained Anglican Minister. She was CEO from 2012 to 2019. It is hard to figure out which bit of the Ten Commandments she omitted to read, especially “Thou shalt not steal” and “Thou shalt not bear false witness”.

Listening to the testimonies in the Post Office Horizon Enquiry led by Sir Wyn Williams, it is clear there is a sub-group of human beings who have little right to call themselves “human”. This includes the bosses at Post Office Limited and Fujitsu (as well as their various lawyers) who knowingly sent hundreds of innocent victims to prison (including a pregnant woman). Having extorted money from their victims to repay the “shortages” falsely reported by the Horizon software, the Post Office bosses then paid themselves whopping bonuses.

There is a great deal of information, background and commentary on the Post Office scandal – including Nick Wallis’ excellent book “The Great Post Office Cover Up“; Computer Weekly’s excellent, comprehensive coverage; the British government’s own report; and even a television docudrama which reconstructed the appalling events in Mr. Bates vs The Post Office.

The Post Office/Fujitsu scandal was the subject of a public enquiry which exposed the appalling events and profound negligence and criminality by Post Office and Fujitsu bosses and staff. Thanks to the exceptional diligence of the barristers who represented the victims and expertly dragged the truths, half truths and lies out of the perpetrators, the public can finally see the truth.

What remains to be seen, however, is what compensation the victims of the Post Office and Fujitsu fraud will receive. Hundreds of sub postmasters were wrongly convicted of false accounting and theft, and in numerous cases made to pay back the money they had never stolen, and often sent to prison. Hundreds of lives were ruined and some victims committed suicide because of the shame of being viewed in their close-knit communities as guilty of theft and false accounting. Taking into account the wider interests of the families of the victims, however, this atrocity has ruined thousands of lives.

The Post Office has, reportedly, spent hundreds of millions on legal fees – to defend its position, deny responsibility and culpability, and delay paying out compensation to its victims. Figures vary, but it is clear the Post Office has spent way more on its own fees than it would have done had it simply paid fair compensation to its victims.

While the Post Office/Fujitsu enquiry is now complete, the civil litigation against the Life Offices is currently going through the Isle of Man courts. And, like the Post Office, the Life Offices are throwing millions of pounds at their lawyers to try to evade paying their victims the redress they deserve.

There are numerous similarities and differences between the Post Office scandal and the Life Office scandal (Utmost International, SEB, RL360, Investors Trust etc). The bosses at the Post Office and Fujitsu had a limited, finite pool of victims in the UK – whereas the Life Offices had – and still have – an unlimited pool of victims globally. Plus, the Life Offices did not falsely prosecute their victims or send them to prison. But they still ruined their lives nonetheless.

Let’s compare some of the tragic similarities between both scandals:

The Post Office was headed up by an ordained Anglican minister (Paul Vennells). She should have known better.	Quilter (Old Mutual) (leading player in the Life Office scandal) was headed up by a former Isle of Man regulator (Peter Kenny). He should have known better.
The Post Office knew that Fujitsu’s “Horizon” accounting software was full of bugs and could not be relied upon. Horizon would inevitably report false statistics and financials.	The Life Offices knew many assets offered on their investment platforms were high-risk, high-commission and bound to fail. These investments would inevitably cause severe losses.
Fujitsu is a key “strategic supplier” to the UK government, making £100m a year from this work, and has won 150 new contracts worth £2.04bn since the 2019 court ruling that Fujitsu’s Horizon IT system caused accounting errors that were blamed on the sub-postmasters.	The Life Offices (Utmost, RL360, Hansard etc) are still to this day used extensively by virtually all offshore brokers and QROPS providers. Posting eye-watering profits and AUM, the Life Offices continue to flourish but offer to pay no compensation to their victims.
Fujitsu’s clients for these lucrative contracts include the Home Office, HMRC, the Foreign Office, the MoD, and the DWP. Plus the £2.4bn lifetime contract Fujitsu still has with the Post Office for the Horizon system.	Life Offices continue to provide unnecessary insurance bonds for virtually the entire offshore financial services market. These products serve only to pay undisclosed commissions to the brokers and provide no benefit to the investors.
Fujitsu and The Post Office have jointly caused millions of pounds’ worth of financial losses and damage to hundreds of sub postmasters. Still only pitifully small amounts of compensation have been paid to the victims.	Life Offices have caused many hundreds of millions of pounds’ worth of financial losses to thousands of investors. Still no compensation has been paid or received.
The Post Office continues to pay a herd of lawyers millions of pounds to fight against paying just compensation to the sub postmasters who were victims of this scandalous crisis.	Life Offices Utmost International and Friends Provident are paying lawyers in the IoM to fight against paying compensation to the victims of investment fraud and undisclosed commissions.

WHICH IS WORSE? THE POST OFFICE SCANDAL OR THE LIFE OFFICE SCANDAL?

It really is hard to say. In both cases, thousands of people’s lives have been ruined. Marriages have been destroyed, homes and businesses lost and unnecessary deaths have occurred. The Post Office (and Fujitsu) had a limited and finite pool of victims (only the sub postmasters and their families in the UK) – whereas the Life Offices have an infinite pool of victims across the globe. And this scandal continues to this very day – entirely unsanctioned.

Save for the outstanding justice and compensation due to the sub postmasters, and the impending criminal proceedings against those responsible at The Post Office and Fujitsu (and possibly some of the lawyers who helped cover up their fraud), this matter is over bar the shouting. By contrast, the Life Offices are continuing full blast with the same business model which has destroyed countless lives, families, marriages and life savings.

The Post Office/Fujitsu victims will still have to wait many years for their rightful compensation – while the lawyers continue to get rich and the government prevaricates feebly. There are faint signs that Paula Vennells and Nick Read may yet serve time behind bars. But at least something is being done, and there is a legal process in place. However, the Isle of Man and Irish governments and regulators have shown zero interest in the fraud committed and facilitated by the Life Offices.

January 21, 2025

Trafalgar Multi Asset Fund Judgement

High Court Rules in Trafalgar Multi Asset Fund Case against James Hadley and associates.

In a recent High Court judgment, Judge Mr. Nicholas Thompsell found that the Cayman-Islands based Trafalgar Multi Asset Fund (TMAF) was involved in an illegal conspiracy to “extract commissions from the investments.” The defendants, who were also behind the 2013 Store First pension investment scam, were found guilty of acting together to establish TMAF and deceive investors.

The claimant, Doran & Minehane, the liquidator of TMAF, argued that the investments were uncommercial transactions, potentially fictitious, or involved undisclosed self-dealing benefiting the conspirators. The investments were designed to exploit and misappropriate pension funds for the defendants’ benefit.

The judge determined a deliberate intention to harm TMAF, stating that the arrangements aimed to generate commissions for the conspirators at the fund’s expense. The accused faced a range of serious accusations, including breach of financial services regulation, fiduciary duties, and involvement in unlawful means conspiracy.

The victims, who suffered significant losses due to these schemes, have our sympathy. The court’s judgment establishes solid principles of liability, which may lead to a faster receipt of claimed monies and reduced legal costs for the defendants.

For the full judgment, click here: High Court Rules in Trafalgar Multi Asset Fund Case against James Hadley and associates.

The FSCS is now accepting claims for compensation of up to £85,000 for victims of the Trafalgar Multi Asset Fund investment scam. James Hadley’s advisory firm – Nationwide Benefit Consultants – (which later changed its name to The Pension Reporter) had been an agent of FCA-regulated Joseph Oliver.

This is a helpful lesson for victims and potential victims of pension and investment scams. The FSCS compensation payments will be funded by levies on the decent, qualified and ethical IFAs who don’t operate scams. Justice and education combined in one bitter pill.

August 14, 2023
Pension Scam Investments
The world of pension and investment scams is dominated and driven by commissions on investments (usually unregulated). The scammers’ strategy is always identical: get the pensions away from the safety of a reputable pension provider and into the hands of a SIPP, a SSAS or a QROPS. One purported benefit of these types of schemes is that the member has control over where the funds are invested. This means that the scammers have control over where the funds are invested. These types of schemes are open to abuse by unscrupulous commission hunters whose only mission is to fill their own pockets – at the expense of the victim. Once transferred, the victims’ retirement funds are controlled by the scammers and invested in unsuitable, unregulated investments which pay fat introduction commissions.

It could be argued, however, that not all the investments are necessarily bad. There are some basic rules for pension investments – so let’s take a look at the different types and how they could (or should) fit into a pension portfolio.
- Funds. Funds come in all shapes, sizes, flavours and types. As long as the funds are regulated, have a good track record, are appropriate to the risk profile of the individual investor and are competently managed by qualified investment professionals, they can be appropriate for a pension. However, pension scheme members must not be locked into any funds, and the charges must be transparent and affordable. There must not be any hidden commissions, and any one fund should form part of a diverse portfolio.
- Bonds. Bonds are term loans with supposed “guaranteed” returns or interest. They are not regulated investment products, so there is no guarantee or protection in the event that they fail (as they often do). Typically, they are sold to victims as being “asset backed” and with unrealistically high returns or interest. They also typically pay high commissions to the scammers who promote them. These should be avoided at all costs as they are entirely unsuitable, risky and illiquid for retail investors – and so many of them are out and out scams.
- Structured Notes. These are “derivatives” and are very complex instruments which are only suitable for sophisticated or professional investors. They also pay hefty commissions to the scammers who use them indiscriminately to “churn” their victims’ funds. Churning means investing the same sum of money multiple times in different structured notes to generate the maximum amount of (hidden) commissions. An experienced and sophisticated investor might want to consider having a small part of a pension portfolio invested in structured notes – as long as the commission taken by the “adviser” is low enough (or preferably non-existent).
- Property. Residential property cannot form part of a pension’s underlying assets. However, commercial or agricultural land or property is acceptable. The main problem with property, however, is that it is illiquid – so it should only be used with extreme caution as part of a diverse portfolio of well-spread assets. Property also typically attracts high commissions and can frequently be used and abused by scammers. Store pods and car parking spaces fall into this category, along with holiday accommodation, forestry and industrial units.
The key to building a sensible and appropriate portfolio of assets for a pension is to ensure that only a licensed and qualified adviser is used to recommend the investments. Such professionals should only be charging for advice – and should not be earning commission on the investment products which are sold. If an adviser is receiving commission from the investment provider, then he cannot be independent – and should not be giving advice at all.

The key to making sure that the whole pension investment package is in the interests of the investor – rather than purely in the interests of someone posing (often fraudulently) as an adviser – is to look at each stage in the process.

What I mean by the “package” is this:

A. The transfer out of the existing pension scheme should be in the interests of the investor

B. The transfer in to the new pension scheme should be in the interests of the investor

C. The investment of the pension fund should be in the interests of the investor – and not just the adviser (or introducer)

D. There must be no offers of “loans” or “cashback”

The timeline of the past eleven years is littered with sordid and tragic examples of the whole “package” being nothing but a scam. But often this is true even when one of the component parts is legitimate or even harmless. It is the combination of all the elements which can, together, produce a fatal result: loss (to the investor).

In the UK, every pension scheme member has a statutory right to a transfer from one HMRC-registered scheme to another HMRC-registered scheme. However, this can often be a terrible move if it results in the investment of the money falling under the control of a commission-hungry scammer who has no regard for the interests of the victim.

The most risky part of any pension transfer “package” is always the investment. Here are some examples:

Capita Oak

Bogus occupational scheme set up by a squad of known, serial scammers with a mythical sponsoring employer (in Cyprus). Promoted and distributed by boiler-room cold callers and “introducers”. 300 victims’ pensions transferred into the Capita Oak scheme, and all £10 million of their funds invested in Store First. The scammers behind the scheme earned up to 46% in commission. The scheme was placed in the hands of Dalriada by the Pension Regulator. Dalriada reported that the investments were worthless and Store First was placed into liquidation in 2019.

Carey Pensions

Hundreds of victims’ pensions were transferred to the Carey SIPP scheme purely so their funds could be invested in Store First. With the same result as in the Capita Oak scam, victims found that the “guaranteed” returns of 16% did not materialise. This was because the 16% had been paid “accidentally” to the scammers. One such victim – Russell Adams – took his case to the High Court and lost. But the judgement was overturned in the Court of Appeal and Carey must now reinstate his original pension. Other SIPP providers involved were Berkeley Burke, Montpelier (Curtis Banks) and Lifetime (Hartley).

London Quantum

Another bogus occupational scheme – run by the notorious Stephen Ward. 100 victims were scammed out of their pensions for the sole purpose of investing their funds in high-commission, unregulated funds and bonds. Investments included Quantum PYX – a forex trading fund; Dolphin Trust – now in liquidation; Park First Glasgow; Colonial Capital Loan Notes; The Resort Group holiday flats in Cape Verde and The Reforestation Group in Brazil. The scheme was placed in the hands of Dalriada by the Pension Regulator. Dalriada reports that most of the investments are worthless.

GFS Hong Kong QROPS

A group of known unlicensed scammers – including Square Mile in the Czech Republic – advised hundreds of UK residents to transfer their pensions to this Hong Kong scheme. All the victims had their pensions invested in worthless, high-commission, unregulated funds and bonds such as Blackmore Global, Swan, GRRE, Granite and Christianson Property Capital. The scheme is now being re-registered by the Hong Kong regulator – and the funds are deemed to be worthless.

Continental Wealth Management

Unlicensed CWM, based on the Costa Blanca in Spain, defrauded 1,000 British expats out of £100 million worth of pensions and life savings. Victims had their funds invested in high-risk (and high-commission) structured notes which were only suitable for professional investors. The clients’ signatures were forged on the investment dealing instructions. Most of the structured notes suffered catastrophic losses, and what little remained of the victims’ funds were further eroded by the high fees on the illegally-sold insurance bonds provided by Quilter, Utmost and SEB. The CWM crew – along with Stephen Ward of Premier Pension Solutions (who signed off all the pension transfers) – are now facing criminal charges of fraud and forgery in Spain.

A pension scheme is a bit like a store pod. It is a container – no different to a cardboard box or shopping trolley. By itself, the scheme (or the pod) is harmless. The harmful ingredient is the greedy, unlicensed introducer or “adviser”. Fill a shopping trolley with unhealthy foods, alcohol and cigarettes and you have a recipe for an untimely death. Fill a store pod with flammable chemicals, and you risk an explosion. Fill a pension scheme with high-risk, high-commission, toxic investments, and you have the perfect recipe for poverty in retirement.
October 14, 2021
Manita Khuller Award – Justice Against All Odds
The recent awards given to Quilter Cheviot and Quilter International by International Adviser (sponsored by Quilter) must have sickened and disgusted many Quilter (OMI/Skandia) victims. Editor Kirsten Hastings’ saccharine and gushing words of praise will have been seen as offensive in the extreme by the thousands of victims who have lost their pensions and life savings in Quilter International death bonds.

While there were, indeed, some very decent firms given well-deserved awards for excellent service and innovation, the prizes handed out to the sponsors of the event were just plain wrong. International Adviser Editor Kirsten Hastings should hang her head in profound shame. She knows full well how many people have been ruined by Quilter. She knows Quilter’s victims are dying – and some have died. She is fully aware that many more are contemplating suicide and that most are facing a bleak Christmas and poverty for the rest of their lives. And yet she can still publicly praise a company which she is fully aware has facilitated investment fraud on a massive scale; congratulate them warmly, and smile broadly while cocking a coquettish nod at the distraught victims as she played canned applause.

I’m going to add an award which was conspicuous by its absence; an award for a brave and determined woman who stood up in the flaccid jurisdiction of Guernsey to a negligent pension trustee: FNB International. Home to many scams and scammers, Guernsey had for many years hosted pension scams – until eventually de-listed by HMRC. A well-known tax haven, Guernsey does have an ombudsman for financial services (albeit a weak and ineffective one) – but he refuses to hear any complaints about matters relating to the height of Guernsey’s disgraceful past.

The heroine so who richly deserves a medal is Manita Khuller – victim of Quilter International, FNB International Trustees and Professional Portfolio International. Between them, these three negligent and culpable parties conspired to cause the destruction of her two final salary pensions worth £330,000 ($430,921/€386,574). The Guernsey Court denied Ms Khuller’s original claim for restitution – and, at first, all seemed lost and it looked like the scammers were going to get away with it. But, unprepared to go down without a fight, Khuller sought an appeal based on the gross negligence of the unregulated adviser – Professional Portfolio International, which FNB had used while she was living in Thailand.

Roger Berry of Concept Trustees in Guernsey, commented on this: “The trustee sought to show that they could rely on the delegation to the adviser/manager to remove or qualify its duties as trustee and in any event, to be liable, the trustees had to be shown to have acted with gross negligence.”

Mr. Berry spoke from significant first-hand experience – as he himself had been accepting investment instructions from AES International’s Stephen Ward (of Premier Pension Solutions in Spain) in the high-risk and toxic EEA Life Settlements fund as far back as 2010. So, he knows all about the catastrophic consequences of accepting business from known serial scammers into obviously unsuitable investments. Berry is also familiar with the art of gross and grotesque negligence.

Rather more eloquently, Henry Tapper covered the subject and asked some very pertinent questions about the Manita Khuller case:
1. How she lost two guaranteed DB pensions with strong employer covenants
2. Why PPI continues to operate throughout Asia under MD Eric Jordan
3. Why Old Mutual and Skandia (now Quilter International) have yet again been found wrapping dodgy investments
4. How a South African and now UK bank is owning a Guernsey Trust in the first place
5. What Geoff Gavey, Alan Glen and co were doing at FNB international to claim “trusteeship”.
Perhaps, in years to come, people in the financial industry will discuss in hushed tones the epic and cautionary tale of Manita vs. Quilter.

But What has Quilter got to do with a Guernsey-based pension trustee who accepted unregulated investment advice into toxic, high-risk, unregulated funds – LM and Mansion Student Accommodation?”

The answer is, of course, EVERYTHING. A Quilter insurance bond should never have been used in a QROPS at all in the first place – and was only there in order to provide scammers posing as independent financial advisers with hefty, undisclosed commissions.

This case was about FNB International, the guilty QROPS trustee who facilitated this scam. But, of course, this firm did not act alone. As in all the thousands of similar cases, the main protagonists started with the rogue advisory firm and ended with the rogue life (or, rather, death) office – in this case Quilter International. But similar cases involving this type of pension investment fraud involve SEB, Generali, FPI and RL360.

Manita Khuller was advised to transfer her defined-benefit pensions by Professional Portfolio International, an unlicensed advisory firm based in Bangkok – where she was living at the time – into the Plaiderie QROPS. Of course, the reality was that her pensions should never have been transferred at all and would have been much better left where they were – safe in the hands of professionals and far away from the grubby paws of unlicensed scammers posing as financial advisers.

Then, going down the well-trodden path of traditional pension and investment scams, PPI put their victim’s fund into a death bond for their undisclosed 7% or 8% commission, and then invested it entirely in high-risk, toxic, unregulated funds for further huge, undisclosed commissions. None of these three phases of the scam should ever happened: not the transfer out of her final salary pension scheme; not the purchase of the unnecessary, inflexible and expensive death bond; not the risky, inappropriate investments. But Quilter International facilitated it all – rewarding the scammers at PPI handsomely (as they do with so many unregulated scammers across the globe).

Professional Portfolio International – run by Eric Jordan and Colin Bloodworth – claim, on their website, to: “strive to help each client grow, protect and enjoy their wealth”. But this, of course, is completely untrue. If they had their clients’ interests at heart, they wouldn’t have put Manita Khuller into a Quilter International bond in the first place; and they wouldn’t have invested her precious pension in high risk toxic crap in the second place. Their only motivation was, of course, their own fat commissions.

Jordan and Bloodworth claim to have a “very knowledgeable and suitably qualified team of experienced advisers”. But this is clearly untrue – as any qualified adviser would know that an insurance bond serves no purpose inside a pension wrapper and wouldn’t be seen dead advising a valued client to invest in worthless rubbish such as LM and Mansion.

Jordan and Bloodworth’s website goes on to boast that “PPI is able to deliver the highest level of progressive financial planning and wealth management services”. And yet, it is clear this is not only a black lie, but that “planning and service” are the furthest things from their minds. The only things they care about, obviously, are fat commissions and conning victims like Manita Khuller out of their pensions and life savings.

So, Manita Khuller was failed and scammed by three parties:
- Rogue advisory firm Professional Portfolio International in Bangkok – run by Eric Jordan in Thailand and Colin Bloodworth in Indonesia
- Rogue QROPS trustee FNB International in Guernsey
- Rogue death office Quilter International (previously Old Mutual International/Royal Skandia)
Manita Khuller – like thousands of other victims of Quilter International, QROPS trustees and unlicensed advisers – was a low-risk, retail investor – as is anyone investing a pension fund. But more than half of her pension – around £170,000 – was put into LM Managed Performance Fund, run by Australian-based LM Investment Management. This company is now in administration. Another big chunk was put into the Mansion Student Accommodation Fund which is now in liquidation.

The risk-laden, unregulated LM Managed Performance Fund invested in residential properties on the Gold Coast, with some IFAs outside of the company issuing warnings about its health as early as 2011 (it collapsed in 2013); affecting the finances of some four and a half thousand investors.

When she learned of the failure of LM, Manita began to look into her other holdings, discovering her pension pot of over £300k had been split into three different high-risk, unregulated funds designed for professional, experienced investors with a large supply of money they could afford to lose and an appetite for risk to match.

Almost a third of her money had been invested in the Mansion Student Accommodation fund, and due to the fund’s liquidation her money had been frozen without her being able to access it at all. Speaking to This is Money, Manita commented:

“No one with a moderate or low tolerance to investment risk should have had their money put into such funds.“

And that, in a nutshell, is the crux of the situation. Quilter are far too willing to give terms of business to unlicensed scammers – with no relevant qualifications or regulations in place to ensure their professional obligations are not compromised by greed, lies and disloyalty. Quilter have been doing this for years now – and have made a fortune out of the sales of their expensive, unnecessary death bonds. They have perpetuated the myth for years that firms with only an insurance license (or even no license at all) can “advise” on investments as long as they flog their victims a death bond and then “pick” from the toxic investments on the death bond provider’s platform – obviously always choosing the investments that pay them the highest commissions (like LM and Mansion).

So here is the award that Kirsten Hastings of International Adviser should have given:

INTERNATIONAL CHALLENGER OF PENSION SCAMS

(especially those facilitated by Quilter International)

RELATED ARTICLES
December 15, 2020
Pension Life – Pension File October 2019
The Kiwis were grass and England was a lawnmower. For a couple of hours we forgot Brexit and remembered our national pride.

In a Week that saw an inconclusive result in the UK v Europe match (yet again), at least England taught New Zealand how to play rugby.

And the battle against pension scams moved up a gear as the press reported on the first round in the victims v scammers tournament.

Olive Press journalist Joshua Parfitt reported on the first round of the criminal proceedings in Denia on the Costa not so Blanca. His surprisingly well-written article pulled no punches as it exposed the one million Euros that Continental Wealth Management boss Jody Smart Bell Kirby Pearson took out of the business in the two years before it collapsed in September 2017.

Former cleaner Jody claims she was only a “non-active” director of Continental Wealth and that the company was run by former boyfriend Darren Kirby. She also claims that her property company Mercurio Compro S.L. (which received 670k of the million) was just a front for Darren’s property dealings and that he used the company bank account because he didn’t have his own personal bank account.

Jody’s fashion business – Jody Bell – received 326k of the million. At least she hasn’t tried to claim that this was Darren’s business in reality (and that he had taken to designing frilly frocks between scamming 1,000 investors out of their life savings).

Whichever way you look at it, however, Jody paid herself 1 million Euros on top of her salary of 280,000 Euros. But this was only during the last two years of the life of doomed Continental Wealth – we still don’t know how many millions she paid herself prior to that – at the height of the structured note/insurance bond scam operated by Darren and his team.

There’s an interesting comment on the Olive Press article: English naivete is amazing given any chance for a quick return. Doesn’t anybody do due diligence when it comes to investment? This is like episodes on ” L’l Britain”.

Due diligence would, indeed, have revealed that Continental Wealth operated without a license and that the staff were not qualified.

Until 2015, Continental Wealth claimed to be an “agent” of a firm in Cyprus called Inter Alliance – and that this allowed the CWM scammers to use the Cyprus license. However, this was entirely untrue as Inter Alliance never had any license and had in fact been fined by the Cyprus regulator for falsely claiming to be licensed.

Interestingly, when I click on the Olive Press Article, an irritating advert for Abbey Wealth keeps popping up. The ad offers the same old same old scammers’ trick: “free pension review”. So, coming from the same “stable” as Jody and Darren’s Continental Wealth scam, let’s do our due diligence on Abbey Wealth.

According to the Abbey Wealth website, there are 17 “Senior Wealth” Managers. Most of these have no verifiable evidence of any qualifications, and quite a few are former mortgage brokers. Despite there being no investment license for the firm, several mention investments:

Ben Noifeld: “investment solutions”; Christian Holbrook: “providing highly-regulated, tax-efficient investment solutions”; Mark Smith: “portfolio management and investment planning”; Michael Chambers: “making clients comfortable with their investments”.

In Spain, all these “Senior Wealth Managers” are committing a criminal offence by promoting investment advice without a license”.

There’s one chap – Craig Allanson – who claims to be a Senior International Pensions Adviser, despite no evidence of any qualifications. And the Managing Partner – Victor France – has no evidence of any qualifications (as well as being ex Old Mutual – the kiss of death as far as most Continental Wealth victims are concerned).

However, there is one adviser who is indeed Chartered: Ian Boden. But why on earth would a man who states he “holds the highest level of qualification of Fellowship and Chartered Financial Planner status with the Chartered Insurance Institute (CII)” work for a firm with no investment license? He, of all people, should know better. He’s either desperate or has some dark skeleton lurking in his cupboard.

The final nail in the coffin is that the firm’s insurance license is from the Central Bank of Ireland. So there’s no protection for any of the clients if anything goes wrong. The Irish Ombudsman is hopeless, never upholds any victims’ complaints and is clearly bent towards Irish-licensed firms and against their victims. The Ombudsman’s determinations against SEB and OMI victims are clear evidence of this. And talking of SEB, Abbey’s “Senior Wealth Manager” Iwan Thomas (with no evidence of any qualifications) is ex SEB.

Abbey Wealth – will they altar their insurance bond salesmen’s approach to “wealth management”?

The comment on the Olive Press article by “Chas” does indeed raise the essential issue of due diligence. DD isn’t hard – it is just a question of knowing the questions to ask and understanding the answers. Finding out about regulation (license) is easy – you just start with the firm’s own website. The licensing bit is usually at the bottom on the website. Then you look at each of the advisers and check on the CII and CISI websites to see if they are listed on the register. Then, most important of all, do a Google search.

So here’s a prime example: QROPS provider STM is now trying to force members to use an IoM advisory firm called Creechurch Capital. STM is headed up by Alan Kentish (below) who is no stranger to handcuffs himself, and has a penchant for working with scammers.

A quick Google search reveals that a “whistleblower” had exposed Creechurch for falsifying client records. If you would still want to have this firm as your financial adviser, consider that it is based in the Isle of Man (where many scammers, and Old Mutual International, are based). The Isle of Man has a rubbish regulator and ombudsman and – like Ireland and Gibraltar – seems to positively encourage scams and scammers and treat victims as irrelevant.

You can tell a lot about a firm by the pictures on their website. In the case of Creechurch Capital, it is a bottle of wine. Does that suggest a client would need to be drunk to use Creechurch? Drunk or sober, any potential client should check out the people behind the firm.

Managing Director Jim Dolan claims to be qualified with the Chartered Institute of Securities and Insurance. And indeed he shows up on the CISI register as being Chartered FCSI – only not with Creechurch but with a firm in London called Sentient Capital. Nothing particularly suspicious about that, I suppose, but how can a person be Managing Director of two firms simultaneously? (I thought it was only women who can multi-task).

Miles Ashworth, Creechurch’s Head of Private Wealth, appears on the CISI register as claimed. And the rest of the senior management team seem to be a reasonable bunch. Also, the company was sold to Nayyar Group in March 2019. So somebody must have done their due diligence on the firm and paid good money for it.

But the question remains: why would a decent bunch of qualified and experienced financial services professionals be seen dead working on the Isle of Man along with so many dodgy, unregulated fund houses such as Blackmore Group and rogue life offices like Old Mutual International and Friends Provident?

And, even more important, why on earth would the guys at Creechurch want to be associated with STM? Don’t they know that STM has a history of working with scammers and that they facilitated the Trafalgar Multi-Asset Fund scam by investing all 400 victims’ pensions in XXXX XXXX’s own fund?

So back to the real World: rugby; Brexit; Halloween and the end of the decade looming. It really has been a dreadful decade for pension scams: thousands of people scammed out of £ billions. Let’s hope the scammers at Continental Wealth Management will all get hefty jail sentences and that this will force any advisory firms operating the same business model to turn away from the dark side.

So what exactly is the “dark side”? In a nutshell:
- Providing services without a license
- Having unqualified “advisers”
- Mis-using insurance bonds (purely for the commissions)
- Putting low-risk investors in high-risk investments (purely for the commissions)
HAPPY HALLOWEEN TO ALL!

(don’t let the Dark Side get you!)
October 28, 2019
Lack of knowledge leads to loss of funds – rogue advisers

The Pension Scams Industry Group (PSIG) has carried out a pilot survey on pension scams. The survey has identified seven key findings and concluded that most scams are carried out by rogue advisers and unregulated “introducers”. This is something we write about regularly, so it is great that PSIG has finally caught up.

Henry Tapper wrote a blog about the survey, ‘Shining light on pension scams.‘ He wrote:

“Another significant concern was member awareness of advice. PSIG stated, after they found in almost half (49 per cent) of cases, the member had limited understanding or appeared to be unaware who was providing the advice, the fees being charged, or the receiving scheme to which the transfer would be made.”

A lack of understanding of the way the financial industry works is something that the scammers play on.

Many of our blogs here at Pension Life focus on getting information across to the public. You owe it to yourself to understand how the pension system works. This understanding will empower you and your money, protecting it from the scammers. We provide the platform for this information, you just need to read it.

However, time and time again we find we hit brick walls when sharing information.

Our blogs are shared on lots of social media networks. I find in many cases – especially on Facebook – that the links to our blogs will get deleted after the admins refuse to approve them. Some readers state that the blogs we write about expat scams are not relevant to expat issues.

We have been told that our blogs which highlight what questions to ask your adviser are of a commercial and marketing nature. Yet in none of our blogs do we try to sell anything – we just offer knowledge and warnings about how to safeguard your pension.

When met with this negativity, how do we get the information out there? How do we educate the public?

Future unaware victims need to know what to look out for and how to avoid a scam. Otherwise, the cycle will continue. The scammers will outsmart the public and they will continue to get rich off the ignorance of the public. And the victims will continue to see their life savings vanish.

As the saying goes, “ignorance is bliss”. However, if the ignorance leads to you signing your life savings over to a rogue financial adviser – whose only interest is purloining as much of your fund as possible – ignorance is in fact negligence.

You may think you can trust a financial adviser, but we live in a world full of scammers and crooks – quite a few of which are financial advisers. Some of them are very greedy and will stop at nothing to fatten their bank balance at your expense. They have no conscience when it comes to living a lavish lifestyle funded from another’s grim fate.

At school, they teach us about history, geography, maths and more. There is no subject about how to look after your money. Basic education on how to look after our pennies or how to finance our future is not included in the curriculum.

Knowledge is important when it comes to your finances.

I can honestly say that before I started this job, I knew very little about pensions and how they work. I simply knew that a pension was something you get when you are ‘old’.

But ‘old’ comes round too quickly. Whilst working hard, building, saving and living your life. Time flies by.

It is all too easy for a rogue adviser to contact you out of the blue about a

“free pension review” and lure you into a scam.

At Pension Life, we are dedicating our time and words to help educate and inform you about pensions. Our blogs are full of information about scams, what questions to ask when transferring your pension and how to avoid falling victim to a scam.

Make sure you know what questions to ask your IFA.

Above all else – safeguard your pension from the scammers.

Don’t spend your life saving for your future, just to let a rogue adviser snatch it away and spend it on theirs.

We have put together ten essential standards that we believe every financial adviser and their firm should adhere to. Make sure you read the blog and ensure your financial adviser can meet these standards. If he can´t – find one that can.

April 11, 2019
Raising standards – financial advisers and qualifications

I read an interesting article recently which has prompted this blog, written by Blair duQuesnay, CFA®, CFP® – an investment adviser at Ritholtz Wealth Management, LLC. Blair suggests that the most important change needed in the financial industry is qualifications. Poorly qualified advisers give poor investment advice. Bad investments advice leads to loss of funds.

Blair has said one thing that underpins all the work we do at Pension Life:

“The bar to hold oneself out as a financial advisor is low, shockingly low. This is all the more shocking because the stakes are so high. Clients have only one chance to save and invest for retirement. If bad advice leads to the unnecessary loss of capital, there is no time to start over.”

Read Blair’s piece here:

http://blairbellecurve.com/substance/?fbclid=IwAR1or8YzCkxUNh_M5-o9e7WngaYJXXV_vjyWI92ZjXEXqG5x9DWzJMA8rgc

I have written many times in the past about unqualified financial advisers, leading victims blindly into wholly unsuitable investments. These unqualified “snake-oil salesmen” often put most (or sometimes all) of their clients funds into unregulated, toxic, illiquid, no-hoper rubbish which has high commissions for the broker to earn but leave the pension or investment portfolio with an unrecoverable dent.

If investors are unsure about what qualifications an adviser needs to give advice on investments then please have a read of this blog: “Qualified or not qualified? That is the question”

Blair (pictured) talks about substance and the need for higher standards among financial advisers. Whilst I love her thoughts, I know how difficult this might be to achieve. We see wholly unqualified scammers posing as fully qualified IFAs time and time again. These scammers are very good at acting the part and the victims have no idea they are dealing with a fraudster – and sometimes go on for years believing they are dealing with a proper financial adviser.

When accepting financial advice always ask the ‘adviser’ what financial qualifications they have. If it transpires they are not fully qualified to give investment or pension advice – walk away and find someone who is.

Blair’s words highlight this issue perfectly, stating, “What sort of education, credentials, and work experience do these people have? It depends. You cannot tell which type of firm, business model, or regulatory space in which they operate or if they have the right training and qualifications to give financial advice. One broker is a CFA charterholder, while another down the hall had three weeks of sales training and took the Series 7.”

Often the best scammers are the ones with the sales training – they know how to push the ‘hard sell’, make the victim think they are ‘missing out’ if they don’t sign straight away. In offshore firms – especially – we see job adverts for new ‘financial advisers’, which state that they are looking for people with sales backgrounds. All too often there is no mention of the necessity of a financial services background, let alone any financial qualifications. Often guys that used to sell cars or holiday apartments will end up selling pension transfers. These are the ones you definitely want to avoid.

Blair goes on to say, “There’s a common phrase that it takes 10,000 hours to master a skill. Working a 40-hour week with no holidays or vacation, that takes almost five years. I would argue this number is low. I practice ashtanga yoga, a method that adds one new posture when the previous one is mastered. I spent over four years on the same posture. In that daily work of making tiny incremental progress toward the end goal, I overcame fears, corrected weaknesses, and powered through with pure determination. That is substance.”

Blair highlights that we live in a time of instant gratification and almost laziness in regards to making money. From multi-million-pound Youtubers, rich from being stupid in videos, to big-bottomed rich girls selling their life stories to become famous – it is all about obtaining difficult things easily.

Twenty-first-century living is driven by the need for wealth and the need for that wealth to be earned FAST!

These desires are what the scammers use to their advantage. They tell their victims that their funds will be placed in high-return investments. Investments that will easily add great value to their pension fund, meaning they will be able to have a lavish retirement.

The thought of possibly doubling your pension fund in just ten years can seem like something of a dream come true. AND, unfortunately, a dream is usually what this is. Placing your funds in supposedly high-return investments – ALWAYS – means taking a high-risk.

Whilst some high-risk investments do pay off, they are no place for a pension fund – life savings are what people are depending on to keep them in their later years. A pension fund is not a fund to be risked: it should be placed in a broad spectrum of liquid, low-to-medium risk investments. Maybe a small proportion could go into a higher-risk investment but only if the investor’s risk profile says he is comfortable with that degree of risk. Most people – even high-net-worth clients – don’t want to lose ANY money.

A trustworthy and fully qualified financial adviser would know this and he would ensure the advice he gives you is in your best interests – not his. The unqualified salesman giving “advice”, will usually opt for the fund that gives the highest commissions. He can walk away with a fat wallet (probably never to be seen again) and the bleak future of your pension fund is not something he will lose sleep over. But you will, when the high-risk investment in which your entire fund is trapped starts to rapidly lose value.

If the gentle reader doubts these dire warnings, just look at the facts about investment losses that we highlighted in a recent blog:

Who killed the pension? Scammers; ceding providers; introducers; HMRC?

£236,000,000 London Capital & Finance fund (bond), but also:

£120,000,000 Axiom Legal Financing Fund

£456,000,000 LM Group of Funds

£207,000,000 Premier Group of Funds

£94,000,000 Leonteq structured notes

Without stating the blooming obvious, that is well over one billion pounds’ worth of AVOIDABLE losses – and still just the tip of the iceberg.

Blair finishes her article by saying, “We owe it to our future clients to raise the bar. People deserve the reassurance that the person giving investment advice on their life savings has a baseline of knowledge. Until then, clients must continue to do their research on advisors. Look for those who have put in the time to learn their craft and have degrees and credentials to prove it. Often these are not the best salespeople, but at least these advisers have substance behind them.”

What a lovely finish and what a very important statement. Financial advisers are not salesmen, they are financial advisers. Their work should be conducted in a way that best suits the needs of the individual – each individual, separately. And there is one way and one way only to invest a client’s money: do a proper, thorough, professional risk assessment and then invest strictly in accordance with that the resulting risk profile.

Slow, steady and fully qualified financial advice always wins the race.

April 1, 2019
PENSION OMBUDSMAN COMPLAINTS AGAINST NEGLIGENT CEDING TRUSTEES
Pension Life is now submitting complaints to the Pensions Ombudsman against ceding pension trustees who handed over members’ pension funds to scams and scammers. These negligent transfers have ruined thousands of lives and cost victims hundreds of millions of pounds’ worth of losses. Some victims have already died and others are contemplating suicide. Complaints against negligent trustees will be published so their negligence will be clearly displayed in the public domain.

LAZY, NEGLIGENT, BOX-TICKING CEDING PENSION TRUSTEES

WHICH HAND OVER PENSION FUNDS TO THE SCAMMERS

BACKGROUND AND LANDSCAPE:

Pension scams have been around for many years. Understanding how they operate and evolve over the years, as well as the ever-shifting risks to victims, should be at the core of any pension trustee’s professional knowledge. Warning members who are potentially transferring into a scam should be any trustee’s first duty. Remember: every pension scam starts with a negligent transfer from a box-ticking trustee.

Trustees have been repeatedly warned of the fundamental obligation to watch out for scams for many years. Yet it matters not how many times they are warned and informed. They simply ignore the warnings, fail to carry out any CPD, and keep on negligently handing pension funds over to obvious scams and scammers.

Here is a list of some of the official warnings, regulations and legislation over the past quarter of a century:

1993 Pension Schemes Act

2000 Trustees Act

2002 OPRA (later tPR) warned about pension liberation

2003 FSA started to take enforcement action against pension unlocking

2004 Pension liberation is first identified within regulations

2006 FSA continues taking enforcement action against pension unlocking

2007 ‘Inducement Offers’ guidance published

2009 Code of Practice No. 7

2010 the Pension Regulator provided guidance to trustees

2012 further tPR guidance

2013 Scorpion

2014 tPR guidance updated

By 2010, the regulators were very fearful of a ‘box-ticking‘ culture by pension scheme administrators and warned trustees to be on their guard – advising them that:

“Any administrator who simply ticks a box and allows a transfer post July 2010 is failing in their duty as a trustee and as such are liable to compensate the beneficiary.”

In 2015, HMRC wrote to Pension Life: “members and pension providers at the time of transfers in January 2012 would have been aware of warnings/tax consequences prior to the transfer of pension funds to (a pension scam), as there were sufficient warnings and publicity available within the public domain from regulator websites, such as HMRC’s, the Pension Regulator’s and the Financial Conduct Authority’s – as well as a number of pension provider websites.’

Pension scams have evolved since 2010 from straightforward liberation fraud, as in the case of the Ark schemes, to a mixture of liberation and investment fraud as in the case of the Capita Oak, Henley and Westminster scams (now under investigation by the Serious Fraud Office); to pure investment fraud, as in the later cases of London Quantum and the STM QROPS/Trafalgar Multi Asset Fund scam – also under investigation by the Serious Fraud Office.

The use of offshore sponsoring employers for UK-based occupational schemes, and QROPS in a variety of jurisdictions ranging from Guernsey, Gibraltar and Malta to New Zealand and Hong Kong, has clearly demonstrated that the reach of this type of financial crime is global. Consequently, it has for many years been clear that CPD by ceding providers is needed not just constantly but on an ever-widening geographical basis.

Tragically, the Pensions Ombudsman’s incorrect assumption that trustees had never been warned prior to the launch of tPR’s Scorpion campaign in 2013 has let many lazy, negligent, box-ticking trustees “off the hook”. Had decisive action been taken against these firms years earlier, many of the subsequent tragedies could have been avoided.

It is important to examine some concrete examples of the despicable behaviour of ceding pension trustees which has been fuelled by the Pensions Ombudsman’s refusal to acknowledge the clear warnings given a quarter of a century prior to 2013.

The below trustees transferred hundreds of members with millions of pounds’ worth of pensions into scams from Ark in 2010/11 and to investment scams in a Hong Kong QROPS in 2015:

Aegon

Armed Forces

Aviva

Clerical Medical

Equiniti

Friends Life

HSBC

Legal and General

Mercer

NHS

Phoenix Life

Prudential

Royal London

Royal Mail

Scottish Life

Scottish Widows

Standard Life

In the Capita Oak and Westminster scams – during 2012 and 2013 (both pre and post Scorpion) – the worst-performing ceding trustees were:

Capita Oak

Prudential

Scottish Widows

Standard Life

Aviva

NHS

Legal and General

Westminster

Scottish Life

Phoenix Life

Aegon

Royal Mail

National Grid

Overall, the worst performing personal pension trustee is Standard Life, and the worst performing occupational pension trustee is Royal Mail.

Perhaps the two worst examples of box-ticking negligence were Friends Life who transferred a victim into a Danish OPS called Danica which wasn’t even on the HMRC QROPS list at the time of the transfer and sent the funds to a fraudulently-set-up bank account in the Isle of Man; and Nationwide which made a transfer to the Salmon Enterprises occupational scheme even after knowing that the trustees had been arrested for fraud (and were later jailed).

CURRENT SCAM TRENDS IN 2019

It was evident from Stephen Ward’s London Quantum scam placed in the hands of Dalriada Trustees by the Pensions Regulator in 2015 that the trend had moved away from liberation and towards the much more lucrative and trouble-free scam of investment commissions. London Quantum invested victims’ pension funds in a variety of toxic, high-risk, illiquid, unregulated funds and loan notes paying very high commissions. This trend has continued with an assortment of funds, loans, structured notes and insurance bonds – all purely used for the commissions payable to the adviser/broker/introducer, and totally outside the investors’ risk parameters. The so-called advisers are mostly unregulated, unqualified opportunists posing as independent financial advisers or “wealth managers”. If these parties do have any form of regulation it is only for selling insurance rather than providing investment advice.

The current trend is very much geared towards getting pension savers away from the UK and into QROPS beyond the reach of the FCA or the Pensions Regulator, where the scammers have complete freedom to invest the funds into whatever is paying the highest commissions. It is not unusual to see 20% to 25% – plus 8% on insurance bonds used as bogus “platforms”.

OUTLINE COMPLAINT:
1. This complaint is against the ceding trustee for transferring the pension fund to a new pension scheme without having conducted adequate checks in relation to the receiving scheme. The ceding trustee failed to provide sufficient warning as required by the Pensions Regulator. As a result of the trustee’s omissions, the entire pension fund may have been lost or misappropriated.
2. The ceding trustee failed to conduct adequate checks and enquiries in relation to the new pension scheme; and either did not send a copy of the Pensions Regulator’s transfer fraud warning leaflet to the member, or may only have sent a copy to the scammer instead. If a copy was sent to the victim, there was no accompanying explanation that amplified the details of the warning signs beyond liberation. The ceding trustee also failed to engage directly with the victim regarding the concerns it should have had with the transfer request, had it properly assessed it.
3. The ceding trustee’s various failures constitute – both individually and collectively – maladministration. But for this maladministration, the victim would not have proceeded with the transfer and suffered a loss.
4. To put matters right, the ceding trustee is asked to reinstate the victim’s accrued benefits in the ceding scheme, or to provide equivalent benefits – adjusting for any revaluation that has arisen since the transfer. To avoid “double counting”, the ceding trustee will be entitled to recover from the victim the amount of his pension fund that the trustees of the new pension scheme are able to retrieve for him, if any.
5. The ceding trustee is also asked to pay the victim an appropriate sum to reflect the materially significant distress and inconvenience suffered as a result of appropriate checks not having been made by it, and the recommended warning information not having been given directly to the victim.
MATERIAL FACTS
1. The victim was a member of the ceding scheme.
2. The victim was persuaded to make changes to his pension arrangements.
3. In February 2013, the Pensions Regulator issued an action pack for pension professionals headed “Pension liberation fraud – The predators stalking pension transfers”. On page 12 this said that:
“Government enforcement agencies and advisory services have worked in conjunction to produce a short leaflet that you can use to help pension scheme members understand the risks and warning signs of pension liberation fraud. The member leaflet is available at www.pensionsadvisoryservice.org.uk and you may want to include a copy with any member correspondence that you issue.”
1. Like the action pack, the leaflet that it mentioned (the scorpion warning) depicted distinctive scorpion imagery to illustrate the threat to people’s pensions.
2. Under the heading, “Looking out for pension liberation fraud”, page 8 of the action pack said: “Here are some of the things to look out for:
- Receiving scheme not registered, or only newly registered, with HM Revenue & Customs
- Member is attempting to access their pension before age 55
- Member has pressured trustees/administrators to carry out transfer quickly
- Member was approached unsolicited
- Member informed that there is a legal loophole
- Receiving scheme was previously unknown to you, but now involved in more than one transfer request
If any of these statements apply, then you can use the checklist on the next page to find out more about the receiving scheme and how the member came to make the request.”

LEGAL LANDSCAPE

Quite apart from the February 2013 Scorpion warning, however, there were pre-existing laws and duties with which the trustee failed to comply.

The Trustees had a duty to comply with their common law and statutory duties of care to the beneficiaries of the scheme. The Trustees Act 2000 provides at section (1):
- Whenever the duty under this subsection applies to a trustee, he must exercise such care and skill as is reasonable in the circumstances, having regard in particular –
  1. To any special knowledge or experience that he has or holds himself out as having, and
  2. If he acts as trustee in the course of a business or profession, to any special knowledge or experience that it is reasonable to expect of a person acting in the course of that kind of business or profession.
(2) provides that the duty applies to those provisions set out in schedule 1 of the Act including ‘The duty of care applies to a trustee when exercising the general power of investment or any other power of investment, however conferred’.

Section (2) provides for the duty to arise when actioning transfer requests as this involves an exercise of the Trustees’ power over the beneficiaries’ investment.

Actioning a transfer request must, therefore, be conducted by the Trustees with such care and skill which the professional trustees should reasonably be expected to have.

It appears this victim submitted an application for a transfer and received a confirmation from the ceding trustee which was compliant with S.95(2)(b) Pension Schemes Act 1993 (PSA93).

S.99 of the PSA93 provides for some duties to the Trustees after the customer has exercised this option.

S.99(1)(b) states that: “…the trustees or managers of the scheme have done what is needed to carry out what the member requires… the trustees or managers shall be discharged from any obligation to provide benefits…”

The question to be considered is whether: ‘the Trustees did what was needed to carry out what the member required?’ One of the Trustees’ requirements was to make a decision as to whether they were able to make the transfer and to act with skill and care in making that decision.

PSA93 provides the victim with the ability to request a transfer. But no transfer is allowable if it is not an authorised transfer or is for the purposes of liberation. Any competent trustee would know that HMRC registration does not offer reassurance of compliance, approval or certification. It is simply a vehicle to register for tax purposes and not regulatory or common law compliance.

The above legal landscape creates an onerous duty on pension trustees and administrators to ensure that the beneficiaries of the pension scheme are not subject to charges, unauthorised payments, unauthorised transfers and other provisions as outlined above. This duty applies to both the transferring pension scheme and the pension scheme to which funds are being transferred.

REGULATIONS, REGULATORY WARNINGS AND POS DETERMINATIONS – PRE AND POST SCORPION

The Pensions Regulator produces guidance and codes of Practice to define the level of knowledge and care a trustee should have. This is not prescriptive, but provides indicative markers as to whether a duty has been breached or not.

The relevant guidance referred to is Code of Practice No. 7 “Trustee Knowledge and Understanding” (TKU). This code provides at paragraph 14 and 15:

“Para 14 “ …. Individual trustees must have appropriate knowledge and understanding of the law relating to pensions and trusts……”

Para 15 “ The degree of knowledge and understanding required is that appropriate for the purposes of enabling the individual properly to exercise the function in question.”

Para 19 “ A trustee must ensure that any individual who exercises a function in relation to the scheme as a director of a trustee company, or in any other capacity, has the appropriate level of knowledge and understanding of the same matters as if the person were an individual member of a trustee board.”

Para 23 “ the scope of knowledge and understanding that is required under the legislation is set out as a list of items in the scope guidance.”

The Scope guidance, in force at the time, was published in 2009 and the relevant scope includes:-

“1c Professional advice and decision-making including the need to obtain professional advice in reaching decisions in Risk management, decision making and delegation

2a Occupational pensions legislation

2c. Money laundering employment legislation, compensation arrangements

5b the importance of the member understanding investment risk (which includes transferring out of the fund)”

Code of Practice No 7 also provides at paragraph 47 that:

“…Trustees must have the appropriate knowledge and understanding. ‘Appropriateness’ includes the notion that trustees should keep their knowledge and understanding up to date so that it remains relevant.”

Paragraph 52 provides that External changes, which may prompt trustees to look again at their knowledge base, could include changes in relevant investment markets or in the law. Further topics may be suggested by the Pension Regulator website.

At the time of the transfer, there was sufficient information in the public realm of which a pension scheme properly discharging its duty would have been aware. In failing to take into account that information, the ceding trustee has caused a loss to the victim.

The Pension Ombudsman, in the decision PO-1837, carefully outlines at pages 7, 8, 9 and 10 a regulatory warning posted in February 2012. The Pension Regulator noted that it had published details of investigation in two cases which had resulted in the appointment of an independent trustee and included advice to pension scheme members about pension liberations schemes; including comments from HM Revenue and Customs and the FSA (FCA). At the same time the Pension Regulator published a fact sheet “Pension Liberation Fraud” giving information for scheme members and the FSA published its own material directed to consumers.

A year later in February 2013 the Pensions Regulator published “Pension Liberation Fraud. An Action Pack for Pension Professionals” in conjunction with a number of bodies including HMRC and the FSA, directed to trustees, administrators and providers. The Pensions Regulator’s guidance was updated in July 2014 but was substantially the same as that provided in February 2013.

It is clear in the case of PO-1837 what level of care is required. In that case Zurich took steps to ensure that they were able to perform the transfer that Mrs Kenyon wished to take place. Zurich had to hand a press release from the Pensions Regulator and provided that to Mrs Kenyon on 28 November 2012. Zurich refused to make the transfer as they could not be sure that the transfer request was a recognised transfer under Section 169 of FA04, but would continue to investigate.

In this case, the reality is that the victim did not have a statutory right to make the transfer requested, and was unaware of that as he or she had been misled by the advisers who were not regulated for pension transfer services, pensions in general or investments.

In the case of PO-1837, the Pension Ombudsman determined that the only directly relevant regulatory and general legal obligation would have been for Zurich to act with integrity, honestly and fairly in the best interest of Mrs Kenyon and consistently with the duty and care they owed to her. The Pension Ombudsman determined that Zurich should have made enquiries as to whether Mrs Kenyon had a right – but notwithstanding the fact that they did not comply with that duty they were right not to make the transfer. It is determined at paragraph 101 of that determination that if a transfer may be for pension liberation purposes (perhaps because the receiving scheme and/or those connected have a history) it may be good reason for delaying the transfer and asking relevant questions during the statutory period allowed for the transfer. Those enquiries may lead to the transfer being withdrawn.

The case of PO-3809, involving Mrs Sharon Jerrard, the Ombudsman came to a very similar determination as the decision of PO-3105 for Mr Gregory Stobie.

More recently of note is a case of Mr Andrew Johnston, PO-5869, in which at paragraph 22 it states that The Pension Regulator did not issue guidance to providers about pension liberation and the danger of pensions scams until February 2013. This is clearly incorrect as previous determinations pointed out and the facts are that the first regulatory warning was considered by the Pension Ombudsman in those cases to be in July 2010 (see below) and then again in February 2012 and not February 2013.

It is not accepted in these submissions that it was only in February 2012 or February 2013 that a properly administered pension scheme should have been alerted to an act of pension liberation and the type of enquiry that was needed in order to delay a transfer.

The legislation dates back to 1993. Pension liberation is first identified within regulations of 2004. Pension administrators therefore were alerted to their statutory obligations of enquiry as to:
1. Whether a transfer is authorised; and
2. Whether the intention to transfer is to liberate a pension.
Considering the statutory framework at this time alone, regardless of any other information in the public realm, the trustee failed to make any enquires or determination and simply rubber stamped the transfer request.

On Tuesday 13 July 2010 the Pension Regulator provided guidance to trustees as follows:

“A strengthened position on transfer incentives has been outlined in guidance published for consultation today by the Pensions Regulator.

It clarifies the role of the employer and trustee and aims to ensure that trustees become actively involved in managing the risks of such exercises. The guidance is accompanied by a new e-learning module and a joint statement with the FSA, all available on the regulator’s website.

The regulator’s position is in accordance with that of the FSA and the guidance replaces the ‘Inducement Offers’ guidance published in 2007. It highlights that trustees should start from the presumption that such exercises and transfers are not in members’ interests and should therefore approach any exercise cautiously and actively.

Trustees play an important role in ensuring that scheme members are in the best possible position to make the right decision in relation to their benefits. In order for transfer exercises to be conducted in an open, fair and transparent way, the regulator expects:
- members to be provided with clear information that is not misleading;
- members to be provided with impartial and independent advice to ensure they make the right decisions;
- trustees to engage in the offer process and apply a high level of scrutiny to all incentive exercises to ensure members’ interests are protected;
- employers to ensure that any offers made are consistent with the principles in the guidance; and
- no pressure of any sort to be placed on members to make a decision to accept the offer.”
The regulator’s chair David Norgrove said:

“As our guidance emphasises, any transfer exercise should be conducted with the highest regard to members’ interests. Trustees should start from the presumption that such exercises are not in members’ interests and should be approached with caution.

Since we published our initial guidance in 2007, we have seen behaviour that concerns us. There has been a box-ticking approach that has led to exercises being run without due consideration to scheme members.

As a result we will be looking closely at exercises and working with other regulatory bodies to ensure that standards are improved. We expect trustees to play an active role in ensuring that members are able to make informed decisions.”

Mr Norgrove added:

“The Pensions Ombudsman will take this guidance into account to determine whether any complaint is upheld. He can then direct trustees or employers to compensate members accordingly.”

The above clearly demonstrates a fear by the regulators of a ‘box-ticking‘ culture by pension scheme administrators and warns trustees to be on their guard.

Any administrator who simply ticks a box and allows a transfer post July 2010 is failing in their duty as a trustee and as such are liable to compensate the beneficiary.

Other information within the public realm preceding February 2013 – the date of the launch of the Pension Regulator’s Scorpion Campaign warning pension trustees and the public against the dangers of pension fraud:

It is our submission that there was sufficient information in the public domain upon which a pension scheme administrator or trustee properly discharging their duty should have been aware of. We list those below.
1. On 25^th February 2010 an article was published in Professional Adviser magazine and also found at www.professionaladviser.com. This describes a case of Mr Kent who made a transfer of £55,354 from two approved pension schemes to the Home Limited Pension Plan. HMRC alleged that the payment to Mr Kent was an unauthorised scheme payment as the law stood in 2001 to 2002 and the payment was treated as income. In order for the Home Plan to be a proper occupation scheme it was accepted that Mr Kent would need to be an employee of Home Limited and the transfer was therefore unauthorised. The case law considered in this case went back to Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance [1968] 2 QB 497 to determine the definition of employment.
1. This was by no means a unique case. HMRC were routinely seeking tax payments from people who had made pension transfers. An administrator of a pension scheme would properly be abreast of the issue of unauthorised transfers from occupation schemes to occupation scheme. An obvious enquiry would be to request evidence of the transferee that they are employed by the company operating the occupation pension scheme.
1. The predecessor of The Pension Regulator, The Occupation Pension Regulatory Authority (OPRA) warned about the practices of pension liberation as long ago as 2002. Between 2003 and 2006 the FSA took enforcement action against a number of IFAs in relation to unsuitable pension unlocking advice. July 2010 a guidance news release from the Pension Regulator to trustees with regards to how requests to transfers should be considered.
1. On 11 December 2007 an article was published on www.sackers.com. This describes the case of Mr Dunne who appealed against an amendment on his self-assessment tax return which resulted in an increase to his tax liability following a transfer of his benefits from one pension scheme to another.
1. The Pensions Regulator’s “Alert in the economic downturn” (April 2009 Statement) warned of dishonesty and fraud being a real risk, including targeting members to access their pension assets through trust busting or other pension liberation activities.
1. HMRC wrote to Pension Life on the 2 June 2015 in respect of tax appeals. They stated “members and pension providers at the time of transfers in January 2012 would have been aware of warnings/tax consequences prior to the transfer of pension funds to (a pension scam), as there were sufficient warnings and publicity available within the public domain from regulator websites, such as HMRC’s, the Pension Regulator’s and the Financial Conduct Authority’s – as well as a number of pension provider websites.’
The current position as set out in the case of Mr Johnston PO-5869, is clearly unsustainable. The duties of a trustee are onerous. They have a high level duty of care to the beneficiaries of their scheme. In this case, the ceding trustee/administrator failed in discharging that duty and is liable for the loss sustained.

If the Trustees had kept properly abreast of the issues and met the standard of care and knowledge expected by the Regulator of a Trustee, they should have as a minimum made a simple enquiry of the victim. A simple enquiry by the Trustees to the victim in any form would have elicited a reasonable suspicion but no such enquiry was made.

It is not acceptable for an administrator, properly following the functions of a scheme, to simply rubber stamp a transfer allowing it to take place. At the forefront of any administrator’s mind should be whether a transfer is authorised or not authorised. Having breached their duty, the trustees have caused a substantial loss to the victim. That loss is the transfer value minus any available assets that the new trustees are able to recover.

Redress for the loss should also cover tax penalties associated with the transfer as the scheme administrators should know this and the victim would not. Such loss is commensurate with legal principles that the loss was foreseeable and caused by the failure in duty of the Trustees to discharge its obligations in a proper manner. Further evidence can be provided of the loss suffered to the victim through the distress caused by potentially losing the whole pension. We therefore ask that you uphold this complaint and put matters right as laid out in points 4 and 5 on page one.
March 12, 2019
Hidden charges that destroy your pension funds
When we buy certain products, they have a warning on them. Cigarette packets, for instance, state that smoking is bad for your health. The wrappers show hideous images of what might happen to you if you use tobacco.

However, when it comes to investments, the ‘advisers’ selling dangerous investments are able to disguise the risks and costs. Offshore, there seems to be no effective code of conduct, or regulation as to what they must disclose and what they can conceal.

Last week the FCA slammed asset managers and retail investment firms over hidden fund charges.

When selling their investments, these firms are really good at omitting details of the full charges that will apply – not only initially – but on an ongoing annual basis as well. These hidden charges put your investment in danger.

The FCA has stated:

“In one case it found an asset manager had omitted a 4 per cent a year transaction cost from the UCITS Key Investor Information Document (KIID).”

In so many pension scams, we hear that the victims were sold a ‘free pension review’; they were not told about the transfer costs; that they were not told about annual fees either. In many cases, the transfer costs and fees work out to be considerably higher than if they had paid a proper fee for the review in the first place. These hidden costs put a huge strain on the fund and sometimes victims can lose up to 25% of their fund to hidden charges.

What worries us most is the lack of regulatory concern or control in respect of expensive and risky investment products. You can’t buy cigarettes without a stern health warning. The same goes for alcohol: bottles and cans clearly state how many units are in the container, and how many units men and women can safely drink per day. They also state that alcohol should not be consumed by pregnant women.

Alcohol companies manage to fit all this info about the dangers of drinking on a tiny label. And this poses the essential question as to why financial advisory firms are able to sell risky investments again and again – omitting clear warnings about the dangerous aspects of them.

Also highlighted in an article by Corporate Adviser:

“The FCA reserved its fiercest criticism for asset managers, saying it found instances where asset manager fact sheets or websites did not mention costs. When they did, they often gave the ongoing charge figure, which omitted transaction costs, performance fees and borrowing charges which are shown in the Key Information Document (KID). In one example, total charges in the PRIIPs KID equated to around 3 per cent per annum – but the only costs given in the fact sheet was the 1.2 per cent annual management charge (AMC).”

This is not news to us at Pension Life. It is something we have been writing about for sometime – and we have a great deal of evidence that hidden, excessive charges are a terrible blight on the face of financial services internationally. It is indeed excellent news that the FCA has finally highlighted the dangers of such hidden charges, but now we need to make sure these dangers are highlighted to the public. CLEARLY AND VISIBLY.

A prime example of advisers and hidden charges is the dastardly duo: Phillip Nunn and Patrick McCreesh. This pair of scammers received £ millions promoting the Capita Oak, Thurlstone Loans, Henley Retirement Benefits Scheme and Berkeley Burke SIPPS scams – leaving 1,200 victims facing poverty in retirement. With that disaster comfortably behind them, they then launched the £40 million Blackmore Global scam and now their network of scammers are promoting the Blackmore Bond which pays a 20% introduction commission to the introducers.

You can’t buy a gun without going to a registered shop and having a licence. (Although, I guess on the black market you can). If you buy a gun on the black market, it is going to be ‘hot’. The person you buy it from is going to be dodgy and it certainly won’t come with the correct paperwork.

So if you are a normal, law-abiding citizen (and cautious investor), you would want a legitimate investment which fits your risk profile – and full paperwork disclosing ALL the charges. Make sure you pick the right adviser who will give you evidence of all these essential details.

Dodgy advisers are still getting away with selling ‘hot’ investments: funds that are clearly toxic and dangerous to your pension fund. These advisers manage to do this very successfully by wrapping them in a fluffy cover and selling them with an array of unrealistic promises of high returns and alleged capital protection to reel the victims in.

When considering a pension transfer, we urge you to familiarise yourself with our ten standards. Your adviser ought to adhere to these standards anyway – and if he doesn’t then walk away. Number eight covers what we have talked about in this blog: CHARGES.

Your adviser MUST GIVE YOU: Full disclosure of fees, charges and commissions on all products and services in writing, before you commit. So before you sign anything regarding a pension transfer and subsequent investment, please ensure you know exactly what charges will be applied to your fund: before, during AND after. It is also imperative to know if there is a lock-in period and early exit penalty and to make sure you are comfortable with that.

Excessive and concealed fees can ruin a once healthy and happy pension fund – just like smoking can ruin your lungs and drinking can ruin your liver. Hidden charges can put your funds in danger and ruin your retirement savings beyond repair.

Here is a list of our ten standards.

STANDARDS ACCREDITATION CHECKLIST FOR FINANCIAL ADVISERS:
1. Proof of regulation for all services provided by the firm and individual advisers in the jurisdiction(s) where advice is given and the clients are based.
2. Verifiable evidence of appropriate, registered qualifications and CPD for all advisers. (Where there are insufficient qualifications, there must be clear evidence of plans and preparation to achieve required goals within a reasonable, stated time frame).
3. Professional Indemnity Insurance
4. Details of how fact finds are carried out, how clients’ risk profiles are determined and adhered to.
5. Details of the firm’s compliance procedures – assuring clients of the highest possible standards and assurance that risk profiles are always accurately and faithfully respected.
6. Clear and consistent explanation and justification of the use of insurance bonds for investments.
7. Unambiguous policy on structured notes, UCIS funds, in-house funds, non-standard assets and any ongoing commission-paying investments. Report of all investment recommendations for all clients and evidence as to how these match individual risk profiles.
8. Disclosure of fees, charges and commissions on all products and services at time of sale, in writing, before clients commit.
9. Account of how clients are updated on fund/portfolio performance.
10. Public evidence of complaints made, rejected or upheld and redress paid.
For more in depth explanation check out our other blog on the ten standards:

Cartoon blog – Don’t be the next pension scam victim
March 5, 2019
Cold calling scammers target expats after the ban in UK – BBC4 You and Yours

Every year we are seeing an increase in the number of victims falling for pension and investment scams. Despite warnings in the public domain and a huge array of information about how to avoid falling victim to a scam, it seems the scammers are so skilled at their sales techniques, that even the cleverest of people can fall for their slick pitches. Often the scammers use cold-calling techniques to initiate these pitches: using emails, texts, mail shots and the good ol’ phone.

We finally saw the introduction of the cold calling ban come into place in January 2019, with huge fines being threatened to firms using these techniques to promote pension sales. We have already written about the firms who have changed their scripts to escape the fines: Cadde Wealth Management is one of these firms. On top of this, we now find that the cold-calling ban has just encouraged the scammers to divert their efforts to British expats.

BBC4 You and Yours recently discussed how the cold-calling ban in the UK has seen a change in the scammers’ behaviour. Unfortunately, this is not a change for the better. As the ban only applies to the UK, scammers are targeting expats instead. This means UK pension holders are still the main target for pension scammers and are at greater risk than ever.

Listen to the show here:

https://www.bbc.co.uk/sounds/play/m000241

Interviewed in the programme, Jamie Jenkins says he has noticed this change. He is Head of Global Saving Policy at Standard Life. He states in the report, “In recent months we have known that the cold-calling ban is coming in and criminals know that too. So we have seen a switch from cold calls originating in the UK to UK customers, to overseas calls to expat customers living abroad.”

Ironically, Standard Life has been one of the worst performers in terms of ceding pension providers who have recklessly and negligently handed over millions of pounds’ worth of pensions to the scammers. Completely ignoring the Pensions Regulator’s warnings in 2010, they shoveled £millions across to pension scams such as Ark, Capita Oak, Westminster, Continental Wealth Management, Global Fiduciary Services and many other QROPS scams.

Here at Pension Life, we know that expats are not just a new target of cold callers – many expats have already fallen victim to horrific pension scams, like those who lost large chunks of their pension funds to CWM. Continental Wealth Management fraudsters like Darren Kirby, cold-called victims, then followed through with repeat house calls and persuaded around 1,000 UK pension holders to transfer out of safe DB pensions into QROPS and illegally-sold life insurance bonds (such as OMI, Generali, SEB, RL360). With promises of high returns, a lump sum in cash and greater freedoms, many professional and well-educated people fell for the scam.

Many victims are now trapped in bogus life “bonds” that are falling in value yearly, while the life offices continue to take their quarterly charges – further damaging the impaired funds. Fortunately, the Spanish regulator – the DGS – has outlawed the selling of bogus life assurance policies this week, ensuring there should be fewer victims of this type of scam.

Here is our cartoon video reconstruction of how the Continental Wealth Management scam worked:

The BBC programme also talks to a Continental Wealth Management victim, Rebecca Cooke, who lost £75,000 after transferring out of an NHS pension and other secure investments.

“We were approached in 2012/13 by a company based in Spain (Continental Wealth Management) who were offering us advice about moving our private pension from the UK into another investment scheme based in the EU. We went with them, but it became blatantly obvious that we had suffered catastrophic losses in our pension and chased them up about what was happening. They had actually invested our funds badly and put them in high-risk rather in low to medium risk funds. Consequently, we had lost that amount of money (£75,000).”

She said she feels stupid for falling for the scam, but she is not alone in believing the shiny sales pitch of these scamming criminals.

It seems the only way to escape the scammers – anywhere in the world – is not to fall for their lies. But the challenge is to know what is true and what is false. And that isn’t easy – the scammers are very clever and can adapt quickly to invalidate public warnings and even use them to their advantage. In addition to the scammers, there are now offshore claims management companies circling like vultures and conning people into believing that complaints against offshore firms can be upheld by UK-based ombudsmen – and that claims can be made against the FSCS (Financial Services Compensation Scheme) in respect of Maltese trustees.

Know what questions to ask your IFA, click here to watch our cartoon

February 20, 2019
More negligence from trustees Berkeley Burke – Store First

Another victim of Berkeley Burke SIPPS investments into Store First storage pods has come forward. 55-year-old factory worker Robert McCarthy, of Ebbw Vale, said he has lost more than £30,000 through a Self-Invested Personal Pension (SIPP). He was duped into the transfer and investment by unregulated firm Jackson Francis which was liquidated in 2014. His investment may or may not be worthless – depending on whether Store First is wound up later in 2019.

Robert McCarthy – who is one of 500 Store First investors who used Berkeley Burke as their SIPP provider – made a serious complaint against Berkeley Burke – and spoke to BBC News on the matter.

McCarthy said:

“Basically I’ve lost my private pension. Thirteen years of hard work, they’ve taken it, it’s gone.

I’ll never trust anyone again. And I can’t believe that they can get away with what they’ve done.”

The BBC has reported Store First as saying that: “In McCarthy’s case, Berkeley Burke failed to instruct Store First on how to manage the pods they purchased as part of a SIPPS. This means that the store pods have stood empty since their purchase. With returns based on rent paid for using the pods purchased, no returns have been made on these empty pods.”

This scam follows the same path as so many other scams we see: an unregulated advisory firm, Liverpool-based company Jackson Francis, introduced the victims to Berkely Burke and the Store First investment. (Jackson Francis was wound up in 2014). With promises of the investment being ‘the next best thing’ and also guaranteed high returns, 500 people signed their pensions over to the SIPPS provider Berkeley Burke.

Berkeley Burke then invested the SIPPS into the store pods, but failed to give permission for Store First to rent the pods out on behalf of the investors – meaning they stood empty. Store First said they were never contracted to manage, advertise or let the storage pods. That responsibility, they say, lies with the pension trustee, Berkeley Burke.

This is not the first time Berkeley Burke have been accused of negligence. In the High Court last October, Berkeley Burke was found to have failed to show due diligence in vetting unregulated investments for another client. The company are currently seeking to appeal against the decision. But with a further 14 individuals, based in Wales alone, making complaints against them, there is definitely no smoke without fire.

Victims were also invested into the Store First storage pods via Capita Oak registered by HMRC on 23.7.2012 (PSTR 00785484RM) by Stephen Ward of Premier Pension Transfers of 31 Memorial Road, Worsley and Premier Pension Solutions of Moraira, Spain. Victims of this scam were lured in by a chap named XXXX who also sold them Thurlstone liberation “loans”. Victims who took the ‘loan’ now face huge tax bills from HMRC for unauthorised payments.

Whilst Capita Oak tuned out to be a scam (currently under investigation by the Serious Fraud Office) and victims have lost huge chunks of their pensions, the initial presentation they were given made the scheme look 100% genuine.

I spend a lot of time sharing our blogs over Facebook into different groups, trying to get the message across about pension scams. Interestingly, many of my posts are met with negative comments.

Last week in a comment on an expat forum, I was told that my blog about expats being targeted by scammers was “irrelevant”. I have also had comments like: “I would never fall for a scam.” However, there is clear evidence that falling for a scam doesn´t make you stupid or naive – especially when the scammers are so good at disguising their sham schemes as genuine investments.

Stephen Ward of Premier Pension Solutions, our most prolific pension scammer, was a fully qualified (to the highest level) and registered financial adviser in Spain. He was also a registered pensions trustee (he has only just been banned as a pension trustee – despite his shady past). Yet Ward has promoted not just the Capita Oak/Store First scam, but also many, many more over a ten-year period. Some of these include Ark, Evergreen (New Zealand) QROPS, Henley Retirement Benefits Scheme, London Quantum, Elysian Bio Fuels, Continental Wealth Management.

Therefore, when it comes to the crunch, it is incredibly easy to fall for a pension scam – especially when it is registered by HMRC and promoted by a qualified financial adviser. It is hard to tell the difference between the good guys and the bad guys (who are so good at clever disguises). Pension scam victims include airline pilots, doctors and nurses, teachers, scientists, bankers and even a solicitor or two. Anyone can fall for a cleverly-sold scam – and they frequently do.

Toby Whittaker, owner of Store First, as you can see from his Twitter page, is still promoting Group First and Store First as going concerns. He is also fighting the winding-up petition by the Insolvency Service against Store First.

Despite the fact that the Capita Oak scam now lies in the hands of Dalriada Trustees (appointed by the Pensions Regulator) and the ongoing petition to have Store First wound up (purportedly in the “public interest”), Toby Whittaker still stands proud and says he had no idea that his company was being used as part of a scam.

Over a period of two years, Store First owner Toby Whittaker paid £33m commission to Transeuro Worldwide Holdings Ltd, which funded Jackson Francis.

No one knows where the money went, but it certainly didn´t go to the victims of this scam. We can bet it lined the pockets of the scamming salesmen who incorrectly invested over 1,000 victims’ pensions into Store First.

If the UK government succeeds in its petition to wind Store First up, the hundreds of victims will lose all the funds in their pensions.

The message here is:

Scams are registered by HMRC – which can make them appear to be official and bona fide.

Scammers can make their “schemes” appear to be genuine and to offer viable investments.

Pensions should be invested in low to medium risk, liquid investments.

Many funds that promise high returns are also high-risk and not safe for your pension fund.

Know ALL the facts about your investment and what questions to ask.

Pension liberation scams are now, thankfully, few and far between scammers are busier than ever, so be careful when investing: scammers lurk all over the globe.

Always use a qualified adviser who works for a fully-regulated firm that has the correct investment license – and not just an insurance license.

So, if it sounds too good to be true – it probably is.

And finally…

Cold called and offered a free pension review – JUST HANG UP.

Safeguard your pension from the scammers.

February 20, 2019
Death of the Life Bond (Life of the Death Bond?)
Attention financial advisers in Spain/who provide financial advice to Spanish residents.

18^th February 2019

DEATH OF THE LIFE BOND:

The Spanish insurance and pensions regulator, the DGS, made a judgment against Costa Blanca-based Continental Wealth Management (CWM) on 10.1.2019. The order (translated and summarised below) confirmed that there are strict regulations in Spain for the sale of insurance products. The DGS also made it clear that even if a firm is not regulated in Spain by the DGS, it must conform to the Spanish regulations.

The deadline for compliance with the order was Monday 11^th February. Unsurprisingly, CWM failed to comply. CWM had collapsed in September 2017 and all the scammers who worked for the firm headed for the hills (or Australia). We are now enforcing this order by criminal action against all those responsible. This also opens the way for similar action against any other firms who have mis-sold insurance products without complying with the Spanish regulations.

In certain, limited circumstances, insurance bonds can be beneficial. But in the vast majority of cases they are entirely mis-sold, and the underlying commissions concealed. These hidden commissions prevent the funds from growing and have an ever-increasing detrimental effect on the value of the fund. I have seen evidence of an entire fund being destroyed by irresponsible, risky, commission-laden investments. The life offices (such as OMI, SEB, FPI, RL360 and Generali) continue to apply their quarterly charges while the funds are being destroyed – sometimes even pushing the funds into negative territory.

Why should the use of life bonds be strictly controlled?

I have transcribed the DGS’ judgment below. It is an abbreviated, translated version of the original. I also set out below the reasons why life bonds should now be strictly controlled and only sold/advised by qualified, regulated firms. Once an international standards agreement has been established, it should be possible to ensure that only those firms who understand how to use these products properly will use them in future.

I hope that all advisers providing insurance advice in Spain – and beyond – will now ensure that losses caused by the mis-selling of life bonds are put right. I also hope that this policy will be adopted throughout Europe and in all other jurisdictions so that the worldwide mis-selling scandal can finally be ended.

There will be criminal proceedings – and these will extend to the life offices themselves for profiting from financial crime. The many victims whose life savings have been destroyed by the life offices and their toxic practices will welcome this news. The victims themselves know intimately the numerous faults of the life offices:
- accepting business from (and paying undisclosed commissions to) known scammers and unregulated advisory firms
- offering high-risk, unregulated funds such as Axiom, LM, Premier New Earth and other no-hoper funds
- offering professional-investor-only structured notes from providers such as Leonteq, Commerzbank and Nomura
- reporting the inexorable losses but taking no remedial action
- locking victims into the expensive, pointless bonds long after the majority of the funds had been destroyed
This latest development with the DGS judgment will help the victims take action against negligent life offices such as Old Mutual International and Friends Provident International. This will be a powerful weapon in the recovery process against these parasitic, negligent and greedy insurance companies.

I set out below, in red, reasons why insurance bonds should now be strictly controlled internationally. This is not just my opinion – but an order by the Spanish government. In my view, this is a very sensible and useful order which is in the interests of all consumers throughout Europe and the wider world.

Decent, ethical, regulated firms will comply with the DGS’ judgment. The scammers will not.

——————————————————————————————————————————————————

Madrid, 10 January 2019 – Complaints service file number 268/2016

Chief Inspector of Unit – Ministry of Economy and Enterprise

Secretary of State for the Economy and Business Support

General Directorate of Insurance and Pension Funds (DGS)

Article 6 of Law 26/2006, of 17 July, on private insurance and reinsurance mediation, which regulates the general obligations of insurance intermediaries, states:

“Insurance intermediaries shall provide truthful and sufficient information in the promotion, supply and underwriting of insurance contracts, and, in general, in all their advisory activity….”

The scammers do not, of course, comply with this regulation. In fact, scammers rarely tell their clients that they are going to be put into an insurance bond. Unscrupulous advisers often conceal how the bond will work or for how many years they will be locked in for. Normally, scammers wave an agreement for an OMI, SEB, Generali, FPI or RL360 bond under the nose of the clients – and ask them to sign the agreement with no explanation. Rarely do the scammers allow the client to read the document properly, or disclose the commission they will receive from selling the often pointless bond.

Victims will be locked into the bond long after they have worked out that the adviser has mis-sold the product purely for the 8% commission – and that the charges will prevent the fund from ever growing. In fact, even if the underlying asset were to perform reasonably well, it would struggle to keep up with the combination of the bond and adviser costs.

It is rarely explained that the bond is a bogus life assurance policy (or series of policies); that any life cover is only actually 101% of the original value of the funds the victim has unwittingly placed into the bond. If all the clients had wanted was life cover in the first place, this product would represent terrible value for money. The Spanish Supreme Court has already ruled that life assurance policies are void for the purpose of holding investments – because the life office takes no risk.

Therefore, the life bond fails on three counts:
1. it is a useless life assurance policy
2. it is a useless investment platform
3. it does not comply with Spanish regulations.
I could go on: the life bond is expensive; fails to disclose adviser commissions; offers high-risk, unregulated funds; accepts business from known scammers and unregulated firms; allows professional-investor-only structured notes for retail investors. The list is endless.

Article 26 paragraphs 2 and 3 of Law 26/2006, of 17 July, on private insurance and reinsurance mediation, which refers to insurance brokers, establishes the following:

“Insurance brokers must inform the person who tries to take out the insurance about the conditions of the contract which, in their opinion, it is appropriate to take out and offer the cover which, according to their professional criteria, is best adapted to the needs of the former. The broker must ensure the client’s requirements will be met effectively by the insurance policy.”

If the client had stipulated that he needed a life assurance policy (which he usually didn’t), the adviser should have explained fully how and why any product offered fitted the client’s needs. This virtually never happens. The adviser has already decided (long before he has even met the client – let alone carried out a fact find) – that he is going to flog him a bond from whichever life company is paying the highest commission. And this is how so many victims end up with useless insurance products from OMI, SEB, Generali, RL360, Friends Provident International, Hansard, Investors Trust etc.

Even if the client had specifically asked for – say – £100,000 worth of life cover, these “life” policies could never guarantee to provide that cover. In a proper, bona fide life assurance contract (where the client pays a monthly premium for the life of the policy) the pay-out is guaranteed. In these bogus life assurance policies, the value of the pay-out inevitably decreases as the charges eat into the fund. This is normally the case when disproportionately risky investments are made by the life offices.

Article 42 of the Private Insurance and Reinsurance Mediation Act, which refers to the information to be provided by the insurance intermediary prior to the conclusion of an insurance contract, provides:

“Before an insurance contract is concluded, the insurance intermediary must, as a minimum, provide the customer with the following information:
1. a) The broker’s identity and address.
2. b) The Register in which the broker is registered, as well as the means of verifying such registration.”
This rarely happens in practice – unless the broker is one of the very few professional and ethical firms in the expat world. An adviser might claim to be based in one jurisdiction, but could – in fact – be based in an entirely different one. “Passporting” is often misused as advisers “fly in under the radar” and provide advice in jurisdictions where they have no legal right to operate.

Insurance agents must inform the customer of the names of the insurance companies with which they can carry out the mediation activity in the insurance product offered.

Agents often have terms of business with more than one life office – but will rarely disclose the fact that some or all of them have a long history of facilitating financial crime internationally.

In order for the client to be able to exercise the right to information about the insurance entities for which they mediate, insurance agents must notify the client of the right to request such information.

I have never seen an instance of this happening – which is not to say it doesn’t happen. Just that I haven’t seen it. But then people don’t come to me when things are going swimmingly – they only come when they have lost some, most or all of their fund.

Banking and insurance operators must inform their clients that the advice given is provided for the purpose of taking out an insurance policy and not any other product that the credit institution may market.

And herein lies the problem: the advice is rarely provided for the purpose of taking out an insurance policy – the advice is usually given because the client wants his pension or life savings invested safely, prudently and profitably. Few – if any – clients come to the adviser to ask for a life assurance policy. But they get one, whether they need it – or can afford it – or not.

Insurance brokers must inform the client that they provide advice in accordance with the following obligations:

“Insurance brokers are obliged to carry out and provide (to the customer) an objective analysis on the basis of a comparison of a sufficient number of insurance contracts offered on the market for the risks to be covered. Brokers must do this so that they can formulate an objective recommendation.”

I have never seen an example of an adviser offering a client a selection of possible insurance contracts. The adviser has normally decided which life product he is going to flog long before the client even walks through the door. In a normal insurance contract relationship, it is the insurer which takes the risk. But in life bond contracts, it is the insured who takes the risk – i.e. that his life cover will be substantially lower than that originally contracted and that, indeed, his fund will be severely impaired by the costs of the contract.

On the basis of information provided by the customer, insurance intermediaries shall specify the requirements and needs of the customer, as well as the reasons justifying any advice they may have given on a particular insurance. The intermediary must answer all questions raised by the client regarding the function and complexity of the proposed insurance contract.

I have never seen this happen – which is not to say that it doesn’t happen. But the adviser could only explain to the customer that the sole purpose of the life bond is to pay him 8% commission. And that would inevitably spook the customer – so the adviser doesn’t bother. There will surely be all sorts of flim-flam about the life bond allegedly providing tax efficiency. However, any real tax savings will be resoundingly eclipsed by the high charges.

All intermediaries operating in Spain must comply with the rules laid down for reasons of general interest and the applicable rules on the protection of the insured, in accordance with the provisions of Article 65 of the Law on the Mediation of Private Insurance and Reinsurance.

I have never seen a single instance of an intermediary complying with the DGS rules in Spain or anywhere else. But that is because I only ever hear about cases where the clients suffer losses. The people who are well looked after by competent, professional, ethical brokers never bother contacting me – because they don’t need to! However, I would love to hear from advisers who do abide by the rules.

Every insurance intermediary is obliged, before the conclusion of the insurance contract, to provide full disclosure.

Never happens in my experience. The commission is normally concealed, and the inflexibility of the lock-in period is rarely explained. The victims usually only find this out after they have realised they have been scammed.

In the event that a mediator was an Insurance Broker or independent mediator, he is also obliged to give advice in accordance with the obligation to carry out an objective analysis.

Never happens in my experience. The adviser/mediator doesn’t use the life assurance product for life assurance, but as a bogus “wrapper” for holding investments. Therefore, the likely outcome of any objective analysis is very unlikely ever to be fulfilled.

This must be provided on the basis of the analysis of a sufficient number of insurance contracts offered on the market for the risks to be covered. The mediator can then formulate a recommendation, using professional criteria, in respect of the insurance contract that would be appropriate to the needs of the client.

I have never seen an instance of a mediator offering a selection of possible contracts – and there are no risks to be covered, as the insurer takes no risks. This is why these products have been deemed by the Spanish Supreme Court to be invalid. However, if a mediator were to offer a “selection” of life bonds, they would all be identical as they are all just as bad as each other.

In the case in question, there is no evidence that the aforementioned information was provided to the client before the investment product was contracted. Therefore, Article 42 of the regulations has been breached.

As it has in just about every instance I have ever seen in Spain – and beyond. In fact, one firm in Spain – Blevins Franks – only offers one insurance product and that is Lombard. This is completely illegal.

Therefore, this Claims Service concludes that the mediator must justify the information and prior advice given to his client, so that the obligations imposed by the Law of Mediation can be understood to be fulfilled with the aim of protecting the insured. Failure to comply with their obligations could be considered as one of the causes of the damage that would have occurred to their client.

I have never seen an instance of any firm complying with the obligations imposed by law in Spain. That doesn’t mean it doesn’t happen – and I would love to hear from firms who do comply with this law so that my knowledge can be broadened. However, if this does happen, it is only likely to be in the case of ethical firms, and they are unlikely to use these bogus life assurance policies anyway.

The claim is understood to be founded. In the opinion of this Claims Service, the mediating entity has committed a breach of the regulations regulating the mediation activity – specifically of the provisions of articles 6 and 42 of Law 26/2006 of Mediation of Private Insurance and Reinsurance.

The DGS requires the mediating entity to account to this Service, within a period of one month from the notification of this report, for the decision adopted in view of it, for the purposes of exercising the powers of surveillance and control that are the responsibility of the Ministry of Economy and Enterprise.

The entity – Continental Wealth Management – did not, indeed, comply with the DGS’ requirement. This now gives the green light for this firm and the directors and shadow directors associated with it – as well as the life office which was complicit in this scam – to be subject to criminal proceedings. The life offices, in this case, were complicit as they were effectively profiting from financial crime.

The interested parties are informed that there is no appeal to this judgment. Both the claimant and the mediating entity are made aware of their right to resort to the Courts of Justice to resolve any differences that may arise between them regarding the interpretation and compliance with the regulations in force regarding the mediation of private insurance and reinsurance, in accordance with the provisions of articles 24 and 117 of the Constitution.

THE DEATH OF THE LIFE BOND

I think it would be no understatement to say that this heralds the end of the mis-use and abuse of life bonds (also known as portfolio bonds or insurance bonds). Not just in Spain, but throughout Europe and beyond. This will be warmly welcomed by the thousands of victims who have lost their life savings to rogue insurance companies such as OMI, SEB, FPI and Generali, and unregulated scammers such as Continental Wealth Management.

The ethical sector of the financial advice industry will, of course, be delighted – and there will be a mad scramble by the rogues to find a way round this ruling. And they will fail.
February 18, 2019

Tag: Pension Scams

WHICH IS WORSE? THE POST OFFICE SCANDAL OR THE LIFE OFFICE SCANDAL?

It could be argued, however, that not all the investments are necessarily bad. There are some basic rules for pension investments – so let’s take a look at the different types and how they could (or should) fit into a pension portfolio.

What I mean by the “package” is this:

The most risky part of any pension transfer “package” is always the investment. Here are some examples:

Perhaps, in years to come, people in the financial industry will discuss in hushed tones the epic and cautionary tale of Manita vs. Quilter.

The risk-laden, unregulated LM Managed Performance Fund invested in residential properties on the Gold Coast, with some IFAs outside of the company issuing warnings about its health as early as 2011 (it collapsed in 2013); affecting the finances of some four and a half thousand investors.

INTERNATIONAL CHALLENGER OF PENSION SCAMS

(especially those facilitated by Quilter International)

The Kiwis were grass and England was a lawnmower. For a couple of hours we forgot Brexit and remembered our national pride.

And the battle against pension scams moved up a gear as the press reported on the first round in the victims v scammers tournament.

Due diligence would, indeed, have revealed that Continental Wealth operated without a license and that the staff were not qualified.

In Spain, all these “Senior Wealth Managers” are committing a criminal offence by promoting investment advice without a license”.

So what exactly is the “dark side”? In a nutshell:

HAPPY HALLOWEEN TO ALL!

A lack of understanding of the way the financial industry works is something that the scammers play on.

When met with this negativity, how do we get the information out there? How do we educate the public?

Knowledge is important when it comes to your finances.

It is all too easy for a rogue adviser to contact you out of the blue about a

“free pension review” and lure you into a scam.

Don’t spend your life saving for your future, just to let a rogue adviser snatch it away and spend it on theirs.

“The bar to hold oneself out as a financial advisor is low, shockingly low. This is all the more shocking because the stakes are so high. Clients have only one chance to save and invest for retirement. If bad advice leads to the unnecessary loss of capital, there is no time to start over.”

When accepting financial advice always ask the ‘adviser’ what financial qualifications they have. If it transpires they are not fully qualified to give investment or pension advice – walk away and find someone who is.

£236,000,000 London Capital & Finance fund (bond), but also:

£120,000,000 Axiom Legal Financing Fund

£456,000,000 LM Group of Funds

£207,000,000 Premier Group of Funds

£94,000,000 Leonteq structured notes

Aegon

Armed Forces

Aviva

Clerical Medical

Equiniti

Friends Life

HSBC

Legal and General

Mercer

NHS

Phoenix Life

Prudential

Royal London

Royal Mail

Scottish Life

Scottish Widows

Standard Life

Overall, the worst performing personal pension trustee is Standard Life, and the worst performing occupational pension trustee is Royal Mail.

When selling their investments, these firms are really good at omitting details of the full charges that will apply – not only initially – but on an ongoing annual basis as well. These hidden charges put your investment in danger.

Excessive and concealed fees can ruin a once healthy and happy pension fund – just like smoking can ruin your lungs and drinking can ruin your liver. Hidden charges can put your funds in danger and ruin your retirement savings beyond repair.

Attention financial advisers in Spain/who provide financial advice to Spanish residents.

DEATH OF THE LIFE BOND:

Why should the use of life bonds be strictly controlled?

Madrid, 10 January 2019 – Complaints service file number 268/2016

Chief Inspector of Unit – Ministry of Economy and Enterprise

Secretary of State for the Economy and Business Support

General Directorate of Insurance and Pension Funds (DGS)

THE DEATH OF THE LIFE BOND

The ethical sector of the financial advice industry will, of course, be delighted – and there will be a mad scramble by the rogues to find a way round this ruling. And they will fail.