Tag: Pensions

  • AVIVA – CAMPAIGN AGAINST PENSION SCAMS

    ceding-provider-campaign-aviva-picture-docx

    AVIVA – CAMPAIGN AGAINST PENSION SCAMS

    Pension Life – representing hundreds of victims of pension scams – has been engaging with ceding providers to seek a solution to the failures of regulation and the law which continue to fail to halt the success of scams and scammers.

    One of the earliest pioneers and champions of the fight to resist transfer requests into obvious and suspected scams – Aviva – has responded positively to the proposed campaign and come up with some excellent suggestions.  If implemented promptly and given the support and cooperation of the regulators, government and law enforcement agencies, these solutions could go a long a way to fighting this scourge of the pension industry.

    Coupled with Darren Cooke’s http://www.redcirclefp.co.uk/ excellent website and petition to ban cold calling, this could herald a new era where the public and the industry fight back against scams and help bring the scammers to justice.  http://bancoldcalling.co.uk/

    SUGGESTIONS FROM JOHN LAWSON OF AVIVA:

    • Administrators and trustees to be given the right to block transfers indefinitely, subject to regulator/law enforcement agreement on a case-by-case basis.
    • All occupational schemes should be required to appoint an independent trustee approved by the Pensions Regulator (this existed before the changes to pension tax law in 2006 and its removal is one of the reasons why it is now easier to set up small occupational schemes such as SSAS). The independent trustee should oversee matters such as the level of fees paid and that these are not excessive in relation to the value of the fund and whether investments made meet the prudent person test.
    • Personal pension schemes can now be established by any regulated firm with permission to do so. Whilst fraud via personal pensions is a much lesser problem than via occupational schemes, additional oversight of schemes established by smaller FCA regulated firms would be useful, particularly in regard to the investments the scheme is holding on behalf of its members and the charges levied.

     

    JOHN LAWSON, HEAD OF FINANCIAL RESEARCH, AVIVA

    RE CAMPAIGN TO STRENGTHEN LAW AGAINST PENSION SCAMS

    RESPONSE FROM ANGIE BROOKS OF PENSION LIFE DATED 14.11.2016

     

    Dear John,

    Thank you for setting out your position on pension transfers and scam prevention.  I have transcribed your email below and added my comments in bold.

    Angie

    —————–

    Regarding the campaign for greater rights for pension schemes and pension providers to block transfers to suspicious pension schemes, and additional obligations to investigate the receiving scheme before a transfer is made.

    The law in this area is complex and evolving in response to cases brought before the courts. However, the Pension Schemes Act 1993 gives pension scheme members the right to transfer savings to another registered pension scheme, and requires the original pension provider to make any transfer within six months of the request being made.

    I agree with your position that both the area and the law are complex and need to be not just clarified but reinforced urgently.  The law has been failing for seventeen years and has resulted in many opportunities for the scammers to financially ruin thousands of victims.  In 2009/10, a number of pension scams were launched including: Ark, Tudor Capital Management/Salmon Enterprises, KJK Investments/G Loans and Baxendale-Walker’s three: Lincoln Pensions Administration; Warwick Pensions Administration and A. Admin. Collectively, these schemes accounted for several thousand victims losing a quarter of a billion pounds’ worth of pension funds.  For parliament and regulators to have failed to tighten up and improve the law for so many years is entirely indefensible.

    The industry should have known exactly what their legal obligations were and there should have been no doubts or grey areas in respect of dealing with obvious or suspected scams posing risks to members.  Pension scams had been operating as far back as 1997 and tPR had been warning the industry from time to time since 2002.  On 13.7.2010, tPR Chair David Norgrove stated that: “Any administrator who simply ticks a box and allows the transfer, post July 2010, is failing in their duty as a trustee and as such are liable to compensate the beneficiary.” 

    Some ceding providers ignored tPR’s warnings well into 2013 – which was the first time there was any evidence of a few providers taking some initial inconsistent notice of tPR’s Scorpion campaign (see the Ark, Capita Oak and Westminster summary below).  But sadly many continued to completely ignore the warnings and in August 2014, a Police officer was scammed out of his Police Pension and into the toxic London Quantum scheme.  Far from Scorpion having any widespread effect, the multitude of scams and scammers continue to this day unhindered by tPR’s limited attempts to protect and inform the public.

    In response to the increase in suspicious schemes being established, the industry campaigned for HMRC to tighten up the registration process as, by definition, if a scheme is not a registered pension scheme then the member does not have a statutory right to transfer. In response, HMRC did tighten up its scheme registration process and this subsequently reduced the number of suspicious transfers being requested.

    HMRC did not do this until late 2013 – nearly fifteen years after the industry, HMRC and tPR all knew perfectly well that the registration process was woefully lax and open to abuse by scammers.  It is disappointing that this campaign was not started many years earlier – or indeed that HMRC were so incompetent that it was even needed at all.

    Before that happened, the pensions industry was already working closely with the Police

    Not one single scammer has been prosecuted for scamming the public and since 2003 only four have been prosecuted for cheating the Public Revenue – including Tudor Capital Management directors Andrew Meeson and Peter Bradley.  This sends out the wrong message to the scammers and has resulted in one of those involved in the Capita Oak, Henley and Westminster scams (well over 500 victims totalling over £20m worth of destroyed pensions) setting up an investment scam in the Cayman Islands which has accounted for another £20m worth of lost pensions.

    Before that happened, the pensions industry was already working closely with the regulators

    If the industry had been “working closely” with the regulators, why did ceding providers ignore David Norgrove’s warning that negligent box ticking must result in compensation for the victims? 

    Before that happened, the pensions industry was already working closely with government departments

    In the past three years not a single government department has shown any interest whatsoever in pension scams and indeed the former pensions minister Ros Altmann simply referred to victims as “fools”.  Former DWP Secretary Iain Duncan-Smith promised to help but only stole a bundle of documents from a victim and then reneged on his promises.

    … to raise awareness of pension scams

    There is no evidence that this worked as the scams simply increased from 2010 onwards – and there remain thousands of transfers into scams throughout 2013, 2014, 2015 and to the present day.

    …and to establish a process for fast-tracking reporting of potential fraudulent activity via Action Fraud

    Hundreds of victims have made reports to Action Fraud but all of these have been ignored, no prosecutions have resulted and the scammers have been left free to set up and run further scams.

    Insurers and pension schemes are now blocking transfers to schemes that they consider suspicious, whilst at the same time reporting these schemes to the authorities.

    That is good to hear, but this needs to be a uniform legally-enforceable statutory obligation rather than an optional exercise which only a few practice inconsistently if they feel so inclined.

    However, there is a distinction to be drawn between what is potentially illegal activity and other activity that may be within the law but still poses a threat to someone’s pension savings usually because it exposes their savings to excessive investment risks or excessive fees. Some of those schemes who consider their schemes are legal have challenged pension schemes and providers that have blocked transfers via the Pensions Ombudsman and the courts and I would recommend you read those rulings and judgements to gain a greater understanding of the issues.

    I am well aware of a number of POS determinations and the Justice Morgan ruling in respect of Hughes v Royal London – which was obviously a disaster for the cause of blocking suspicious transfers.  What action is the industry taking to mitigate the risks this retrograde step has caused?

    It would be useful for the law to be clearer on the rights of pension schemes and pension providers to block suspicious transfers, and the process for resolving those cases.

    I agree absolutely and am preparing a complaint against the Pensions Regulator in respect of their long-standing failure to make this clear.

    However, I don’t think it should be the role of providers and pension schemes to investigate suspicious schemes for a number of reasons:

    Certainly it should not be solely down to ceding providers, but they are in the front line and they must comply with their legal obligations – as well as engage with the public, regulators and police to share intelligence on what is happening in the world of pension scams.

    Firstly, it should be the role of law enforcement to investigate and prosecute illegal activity.

    Agreed – it ought to be.  But law enforcement is failing to address this widespread criminal activity and is leaving the scammers free to operate scam after scam.  Evidence shows their track record has been dismal since 1999 and the scammers are still out there, scamming away.

    It should be the regulators’ role to ensure that consumers are properly protected or at least warned about the risk of speculative investments or excessive fees.

    You are absolutely right.  But the regulators are omitting to fulfil this role effectively and this is why I am making a detailed complaint about their multiple, long-term failures.

    There is no conclusive test for what is a suspicious activity and what is not. This is a matter for individual judgement.

    It really ought to be down to basic common sense and this failed entirely and repeatedly in the case of thousands of transfers in the past few years – all of which should have been blocked.  For example, not a single ceding provider in the case of £millions of transfers into Salmon Enterprises spotted that the trustees/administrators, Tudor Capital Management were under criminal investigation.  Shouldn’t it be a requirement that the trustees and administrators are checked out to make sure they aren’t fraudsters?  Also, in the case of Capita Oak and Westminster, not one single ceding provider checked that the sponsoring employer actually existed.  These two schemes shared the same (non-existent) sponsoring employer and that in itself ought to have rung some alarm bells with all the ceding providers.  But this is especially true of the two worst performers: Prudential and Scottish Widows who between them allowed £2,456,216.40 worth of transfers into two schemes with a mythical sponsoring employer.

    Pension providers and pension schemes cannot be expected to identify correctly all suspicious and fraudulent activity all of the time.

    One would have expected ceding providers to be suspicious when they suddenly received multiple transfer requests to a new scheme such as Ark, or new schemes using the same address as previous scams such as 31 Memorial Road, Worsley in the cases of Ark, Capita Oak, London Quantum et al. 

    I am therefore clear that pension providers should not be burdened with any additional obligations beyond our current contractual obligations in the case of personal pensions and trustees beyond their fiduciary duty to act in the best interests of their members.

    I agree entirely that providers should not be burdened with additional obligations beyond their current contractual obligations.  But they must put additional effort into complying with their existing contractual obligations – and the law must, as you have so rightly said, be made clearer.

    Having said that, all of the large pension providers have invested considerable manpower and other resources in trying to stop or at least limit this activity.

    This is good news – but there must also be some resources devoted to helping facilitate successful prosecutions and helping those who are financially ruined by scammers.

    I will not share the exact details of due diligence processes as we have been clear that we will not make these public for the simple reason that it would make it easier for scammers to find ways to get round the system.

    The scammers are perfectly well aware of the industry’s failings and loopholes and don’t need the ceding providers’ help in exploiting them as they already do this very successfully.  However, behind the scenes there must be an early-warning system which shares intelligence throughout the industry to alert all trustees to active scammers and their current operations and tactics.

    On the point about our ability to stop illegal activity, this has become increasingly difficult since the new pension freedoms were introduced last year.

    I agree – a dreadful legacy from a dreadful chancellor. 

    From age 55, people can now access their pensions as cash and there is no longer any need for them to transfer their money to another pension scheme to invest in illegal or highly speculative investments, which is what most of this activity centres around. We have no right to know what people are doing with the money they take out of their pension, so our activities (for those accessing their pension at retirement) are limited to giving pension savers clear and strong warnings about the risk of scams and speculative investments.

    It would be helpful to have copies of what Aviva (and all other ceding providers) give to pension savers so that this can be put clearly in the public domain.

    Ultimately, a balance between personal freedoms (and the personal responsibility that goes with that freedom) and protecting the unwary needs to be struck. Where that balance point lies is a matter for government and regulators.

    And that is the whole point.  Both the government and the regulators are failing.  Stephen Ward was recently given a “dressing down” by tPR for operating the London Quantum scam (the last in a long line of his other scams from Ark onwards).  Scammers need to be stopped and brought to justice, not rewarded with a mild telling off which the likes of Ward will simply shrug off while they sip their champagne beside their swimming pools in Florida.

     

                          THE TOP TEN

    Capita Oak   Westminster  
    Ceding

    Provider

    		 Total Funds

    Transferred

    		 Ceding

    Provider

    		 Total Funds

    Transferred
    Prudential £829,028.76 Scottish Widows £485,751.83
    Scottish Widows £758,167.27 Prudential £383,268.54
    Standard Life £616,607.68 St. James’ Place £291,180.00
    Aviva £611,796.86 Aegon £254,305.63
    NHS £578,547.02 Metlife £246,551.60
    Legal and General £544,084.77 Zurich £123,495.74
    CSP £320,088.42 Dunlop Goodyear AVC £105,137.88
    Scottish Life £287,883.26 MyCSP £94,829.57
    Phoenix Life £275,640.77 Guardian SIPP £92,082.86
    Aegon £263,271.71 Transact £83,022.78

  • ARK PENSION DISASTER – THE TIMES ARTICLE

    The Times – good quality journalism reporting poor quality financial advice

    Ark Pension Disaster – The Times Article – Mark Atherton Uncovers Pension Liberation Scam

    Money

    Pension scam leaves victims in debt

    Angie Brooks is leading a campaign to secure justice for victims of a pensions “liberation” scam                                                  Pic: Richard Pohle

    Mark Atherton

    Last updated at 12:01 AM, September 13 2014

    Thousands of people have lost more than £500 million of their savings after being duped into taking part in unauthorised “pension liberation” scams. Experts say that the true figure runs into billions because many cases go unreported.

    They also warn that next year’s relaxation of the rules governing how you can take your pension cash will provide a fertile breeding ground for fresh scams as fraudsters queue up to exploit the uncertainty around the new pensions regime.

    Some of today’s victims fear they have lost their entire pension savings, while others say they have been driven to the brink of suicide.

    The lure of pensions “liberation”

    Savers were originally lured into transferring their pension pots by the promise of getting their hands on their retirement cash before the age of 55. However, many succeeded in “unlocking” only half of their pension pot, with the rest going partly into uncertain property investments, partly into cash and partly to the scheme’s promoters through hefty fees.

    Savers were told that these schemes were legitimate but that was not true. Now many of the victims are facing financial ruin as they are being told to hand back the money they “liberated”, while Revenue & Customs is poised to slap on a tax penalty of 55 percent of the “unlocked” cash. In many cases, they simply do not have the money to pay.

    The Ark schemes

    Among the biggest “liberation” schemes were those created by Ark, a pensions consultant. These were marketed by financial advisers and so-called “introducers” in the UK and Spain. One of the main players was Stephen Ward, of Premier Pension Solutions (PPS), a Spanish-based company.

    Angie Brooks, below, a former tax barrister, who is leading the class action on behalf of the Ark victims, says: “Mr Ward assured Ark applicants that it was lawful and tax-free and was approved by the Revenue and the pensions regulator. The Revenue registered the six Ark occupational pension schemes without checking for compliance. So did the pensions regulator. This understandably gave the Ark members the reasonable illusion that the schemes were lawful and approved by the UK government.”

    The registration procedures have now been changed. She says that between September 2010 and May 2011, £25 million was transferred from personal and occupational pension plans into Ark schemes, for fees of up to 10 percent of the value of the transferred pot. More was transferred after this, bringing the total to £27 million.

    PPS teamed up with AES International, a firm regulated in the UK, which gave PPS a tied agent agreement to operate in Spain under its regulation (though this did not authorise PPS to carry out pension transfers). PPS carried out at least 160 Ark pension transfers, totalling £10.7 million, with Ark taking a 5 percent cut of each transfer, PPS pocketing a further 3 per cent, as well as a slice of the Ark money, and AES receiving a 12.5 percent slice of PPS’s cut.

    The schemes “unlocked” money by arranging for members to make reciprocal loans, worth about half the value of their pension pot, to each other. Many believed they would not have to repay these loans, known as Maximising Pension Value Arrangements (MPVA). The remaining half of their pension pots, after deduction of hefty charges, was partly held in cash and partly used to buy plots of land or timeshares.

    Alarm bells started to ring in December 2010 when the Revenue expressed “concerns” over the lawfulness of the schemes, though it was not until May that they were suspended and a trustee — Dalriada — appointed. It embarked on litigation that resulted in the Ark schemes being declared invalid and the reciprocal loans judged to be “unauthorised payments” in the High Court in December 2011.

    The cost to Ark victims

    The judge’s ruling delivered a twofold blow to Ark members. First, Dalriada was enabled to demand back the money they had received as loans under the schemes. Second, since the loans were “unauthorised payments” the Revenue was entitled to levy a penalty charge of 55 per cent on these sums. The Revenue has not decided whether to tax the donors or recipients.

    Dalriada has managed to recover more than £6 million of the £7 million which Ark spent on property investments. Sean Browes, of Dalriada, adds that it also has £9 million of Ark money in a bank account and is seeking to unscramble the £10 million of reciprocal loans. However, this has come at the cost of £800,000 in Dalriada’s fees and £1.9 million in legal costs.

    According to Ms Brooks, Mr Ward has, since the suspension of Ark, been linked to pension liberation schemes which have attracted hundreds of fresh customers — something he denies.

    He says: “PPS provided information regarding the Ark schemes in good faith based on the information and opinions provided by Ark and our own independent research. We included statements that independent financial advice should be sought and a number of people who did take advice found the experts they consulted agreed with our understanding of the position. We believe the damage has been caused primarily by the Revenue’s failure to take action when it first became aware of the schemes and by Dalriada’s fees.”

    Sam Instone, the head of AES International, says: “We had nothing to do with the Ark scheme and we earned a negligible amount from our tied agency with PPS. We have no legal responsibility for what has occurred here.”

    Craig Tweedley, who created the Ark schemes, says: “We took extensive advice about the validity of these schemes before launch. We were concerned when we learned that some introducers were claiming that the MPVA loans did not have to be repaid when a key part of our scheme was that they should.”

    Dalriada says: “The Ark schemes were very unusual and have taken some time and, unfortunately, money to unravel. The members of these schemes have been scammed.”

    Anyone with information about these pensions “liberation” schemes is invited to contact mark.atherton@ thetimes.co.uk

    Be on your guard against scams

    • Ahead of next year’s changes to the rules, one aspect of which means those aged 55 or over can take money from their pension, the scammers are gearing up to part you from your cash. Be on your guard
    • If someone promises to help you take money from your pension pot before the age of 55 it is almost certainly a scam: you could lose the lot
    • Even if you are over 55, do not deal with anyone targeting you by phone, text message or approaching you in person. Beware the words: ‘free pension review’
    • Do not deal with anyone who is not registered with the Financial Conduct Authority for pension transfers
  • Ark Disaster – Dalriada Accountable for Strategy

    Ark Disaster – Dalriada Accountable for Strategy

    Dalriada – accountable for strategy

    Need a bigger ark for the Ark Pension Disaster…

    Mark Atherton of The Times wrote:

    We have tried to establish who should take responsibility for the financial disaster which befell investors in the Ark pensions “liberation” schemes. They were suspended in May 2011, leaving hundreds of investors facing ruin after being hit with a punitive 55 per cent tax penalty on the so-called “reciprocal loan” payouts they were given.

    Yet when you talk to the people and organisations involved about who should carry the can for the Ark debacle the response of everyone, from those who originally marketed the schemes to the regulators and the watchdog, is a firm: “Not me, guv.”

    None of this is much help to Ark victims such as Neale Morgan, who invested his money in good faith after checking that the schemes were properly registered and yet now finds himself being punished by the taxman for participating in a scheme which the revenue itself had previously registered.

    The revenue and the pensions regulator have, since October 2013, tightened up the registration process for pension schemes — a tacit admission that the system in place at the time of the Ark fiasco was inadequate.

    It seems unfair that the revenue is now hitting those people who invested in the Ark schemes with severe penalties, while not going after the people who profited from the scam. As Mr Morgan says: “The authorities seem to be punishing the victims, while letting the perpetrators go scot-free.”

    The revenue and pensions regulator should start turning the spotlight on the perpetrators, while the Financial Conduct Authority should launch a full-scale investigation into the Ark collapse and name, shame and punish those found guilty of wrongdoing.

    What is a Pension Scam?

    At the same time, the revenue should consider tempering justice with mercy in the case of the Ark victims. Many of these people were given false assurances that the schemes were viable.

    In most cases they have spent the lump sums that were “unlocked” from their pensions, often on settling debts, and they simply have no money left to pay the revenue’s penalty fees.

    Sadly, the Ark disaster is not an isolated event. Every month brings news of fresh pensions “liberation” cases and the scammers are likely to be gearing up to take advantage of the confusion surrounding next year’s relaxation of the rules governing how you can take your pension cash.

    The message to ordinary investors is a simple one — be alert to anyone promising you easy money if you transfer your pension to an unknown scheme.

    Your default position when confronted by any smooth-tongued salesman should be: “Why is this person lying to me?”

    Ark was an appalling disaster.  It has cost several people not just their life savings but also their lives.  It really is time to make sure that the Pensions Regulator doesn’t just mouth the words “scammers are criminals” but also make sure they are prosecuted.

    What is a Pension Scam?

  • FIGHTING BACK! – THE ARK PENSION VICTIMS WHO WON’T TAKE IT LYING DOWN

    FIGHTING BACK! – THE ARK PENSION VICTIMS WHO WON’T TAKE IT LYING DOWN

    Battered, bewildered and furious, the Ark Pensions victims are gradually coming to terms with the fact that this will be a long and determined battle.

    In 2011, when financial advisers (plausible, credible and slick) assured the victims their pensions would be transferred to a legitimate HMRC-“approved” scheme which would allow a tax-free lump sum of 50% – structured as an unsecured, low-interest loan, it was not surprising that so many people took up the offer.  The offer didn’t come cheap, as there were fees of between 8% and 13% (sometimes more).

    Stephen Ward of Premier Pension Solutions had been running seminars around the UK to promote the Ark scheme to introducers and victims alike and was responsible for a third of all the transfers into Ark – totalling over £10 million.  He used his status as a CII Level 6 qualified former pensions examiner and author of the Tolleys Pensions Taxation Manual to lull the victims into a false sense of security.

    Within a matter of months, weeks or even days, the Ark victims learned that the scheme had been suspended and placed in the hands of Dalriada Trustees.  In the High Court in 2011, Justice Bean, declared the pension withdrawals/loans (called MPVAs – Maximising Pension Value Arrangement) as unauthorised payments and the whole scheme a fraud on the power of investment.

    The Ark pension victims – 486 in total – now face repayment of the “tax-free” lump sums which are classed as loans. They also potentially face 150% tax on the loans, even if they are paid back.  HMRC is trying to get the tax at 55% on the receiving end and the making end of the loans, plus 40% on the scheme itself.  HMRC is also trying to tax those victims who did not receive a loan at all.

    The tax is being vigorously defended – both by Pension Life and Dalriada Trustees.  The Ark Class Action is asking parliamentary candidates to back a motion for a tax concession for victims of fraud.  The victims want to ensure those responsible for this appalling situation are called to account and made to put the members back into the position they should have been in before their pensions were transferred to the Ark schemes and the loans taken out.

    It is not going to be a quick or easy battle, but all the Ark victims are determined not to take this lying down – especially those who did not receive a loan but are being threatened with a tax liability just because “they intended getting a loan”.

    During week commencing 19th June 2017, the victims will be challenging Dalriada Trustees in the High Court Beddoe proceedings.  Dalriada will be asking the court for permission to use the Ark members’ funds to take legal action against them to recover the MPVA loans – around £11 million in total.  If we fail to challenge the application successfully, it will be a race between Dalriada and HMRC to see who can bankrupt the victims first and make them homeless.  HMRC claim the tax will remain payable even if the loans are repaid.