Tag: Royal London

Time for all pension providers to wake up and stop pension scams

The recent PSIG (Pension Scams Industry Group) Scams Survey Pilot 2018 has identified seven “key” findings in their survey. As scam watchers, we are well aware of these points and are, of course, glad they have been highlighted.

PSIG’s key finding are set out below. So let us admit one key fact:

ALL PENSION SCAMS START WITH A TRANSFER BY A CEDING PENSION PROVIDER.

It is interesting that PSIG chose three particular providers to give their answers to the questionnaire sent out: XPS Pensions Group, Phoenix Life Assurance Company and Standard Life Assurance Company. I have no doubt they chose these three providers because of their extensive first-hand expertise at facilitating financial crime. In the Capita Oak and Westminster scams – distributed and administered by serial scammers XXXX and Stephen Ward – and now under investigation by the Serious Fraud Office – Phoenix Life and Standard Life handed over dozens of pensions to the scammers. In Phoenix Life’s case, the total came to nearly half a million pounds’ worth, and in Standard Life’s case it was well over one million.

While there is, of course, substantial hard evidence that both the Pensions Regulator (formerly OPRA) and HMRC had been giving the industry plenty of warnings about scams long before the Scorpion Campaign was published on Valentine’s Day in 2013, it is also true that providers such as Phoenix Life, Standard Life – and other favourite financial crime facilitators such as Aegon, Friends Life, Legal & General, Prudential, Royal London, Scottish Life and Scottish Widows – carried on handing over millions to the scammers well into 2014, 2015 and beyond. And, in fact, they are still at it today.

The “Key Findings” do throw up some interesting facts:

“Information on scams is not readily available at an organisational level”.

Seriously? Don’t these organisations know how to do research? Do they really not know what to look for? They’ve had enough experience over the years – and have had enough examples of spending vast amounts of time trying to cook up reasons to deny complaints against their incompetence for handing over pensions to scammers – to write a whole encyclopedia about scams.

Organisations (such as Phoenix Life and Standard Life) could try talking to TPAS, or tPR, or the FCA, or the SFO, or Dalriada Trustees, or regulators in Malta, the IoM, Gibraltar, Dubai or Hong Kong. Or some of the thousands of victims – who have lost their pensions due to the incompetence and callousness of the ceding providers – who would readily fill in the blanks. There really is no shortage of readily-available, free information. They just need to take the time and trouble to ask for it. It really isn’t difficult. They just have to put their box-ticking pencils down for a few minutes.

“The Scams Code is seen as a good basis for due diligence”

I agree – it is really great. But it is also 78 pages long. Few people have to the time to read, understand or remember such long documents (with too many long words and not enough pictures). What would be helpful would be to get a few of the worst offenders: Aegon, Aviva, Friends Life, Legal & General, Phoenix, Prudential, Royal London, Scottish Life, Scottish Widows, Standard Life and Zurich, in a room at the same time – and bang their heads together. And threaten them that if they don’t get their acts together and stop handing over pensions to the scammers, they will be made to read and memorise the 78-page Scams Code and recite it every morning before coffee break. Twice. Then snap all their box-ticking pencils in half, and JOB DONE! It really isn’t rocket science – there are usually some hints which are as subtle as a brick, such as: the sponsoring employer doesn’t exist; or the member lives in Scunthorpe and is transferring to a scheme whose sponsoring employer is based in Cyprus. Or Hong Kong. Now, I know there was a bit of a hiccup with the Royal London v Hughes case when Justice Morgan overturned the Ombudsman’s determination. But dear old Hughes had probably had a few Babychams too many – and it had slipped his mind that the law is supposed to be about justice and common sense. And that just because a particular piece of legislation has been written by an ass, it doesn’t have to be interpreted with stupidity.

“Significant time and effort goes into protecting members from scams”

This, of course, may be true. I only get to see the cases where the negligent ceding providers do hand over the pensions to the scammers. I rarely get to see the ones that have a narrow escape. But what worries me is that I am in the process of making complaints to the ceding providers who have handed over pensions to the scammers, and not a single one of them thinks they have done anything wrong. So, if they do spend “significant time and effort” doing the protecting bit, how come so many of them still fail so badly? And then try to deny they failed. These providers spend very significant amounts of time and effort writing long, boring letters about how they did nothing wrong – letters which must have taken them at least an hour to write. And yet they won’t spent two minutes checking – and stopping – transfers to obvious scams.

“The more detailed the due diligence, the more suspicious traits are identified”

I am a bit suspicious that this indicates a touch of porky pies here. I’ve never seen any evidence of ANY due diligence by the ceding providers. A bloke at Aviva once told me that they spent thousands on research and due diligence – but I see no evidence of it. The problem is, the ceding providers don’t know what they don’t know. And, to coin one of my favourite phrases: “they don’t know the questions to ask, and even if they did then they wouldn’t understand the answers”.

Interestingly, if – instead of repeatedly spending hours denying they did anything wrong when they handed over millions of pounds’ worth of pensions to the scammers – they spent some time talking to me and the victims trying to learn what went wrong and what due diligence should have gone into preventing a dodgy transfer, they might learn how to stop failing so badly.

SIPPS (including international SIPPS) are the vehicle of choice by scammers

Agreed. But the scammers still love the good old QROPS. But whether it is a SIPPS or a QROPS – both of which are just “wrappers” at the end of the day, it is about what goes inside the wrappers. Where the scammers make their money is in the kickbacks: 8% on the pointless, expensive insurance bond from OMI, SEB, Generali, RL360, Friends Provident etc., and then more fat commissions on the expensive funds or structured notes.

“Quality of adviser tops the list of practitioner concerns, with member awareness a close second”

And hereby lies one of the main problems: ceding providers don’t know who the good guys are and who the bad guys are. And that is because they don’t ask. And they don’t learn from their mistakes when they get it wrong. And they don’t care when they hand the pensions over to the bad guys and their former member is now financially ruined and contemplating suicide. Instead of trying to use their appalling mistakes to improve their performance and understand what “quality” actually means, and how to tell the difference between good and bad quality, they only care about avoiding responsibility for their own failings.

The problem about “member awareness” is that most people assume their ceding provider will do some sort of due diligence. They think that words like “Phoenix Life”, “Prudential” and “Standard Life” convey some sort of professionalism or duty of care. Most members are simply unaware of the appalling track record of these providers – and the extraordinary and exhaustive lengths to which they will go to avoid being brought to justice for their negligence and laziness.

“Sharing of intelligence would help avoid duplication of effort”

Oh, how heartily I agree! I remember a year or so ago, I shared some intelligence and a few beers with a nice chap from Scottish Widows. We met at one of Andy Agathangelou’s symposiums in London – the subject of which was pension scams. The Pensions Regulator was there, Dalriada Trustees were there, Pension Bee were there, lots of interested parties were there (including an American insurer from Singapore), and a couple of victims. I gave a joint presentation with one of the victims who described how he had been scammed and how his provider had handed over his pension so easily – well after the Scorpion watershed. The nice chap from Scottish Widows asked the victim why he hadn’t called the Police. The victim replied: “I am the Police”.

It was very telling that the room wasn’t full of delegates from Aviva, Phoenix Life, Prudential, Standard Life etc. None of them were interested.

Not a single provider has ever phoned me up to ask for advice, or to arrange to speak to some victims to learn something about how they were scammed and how and why their ceding providers had failed them so badly. There are so many victims all over the UK and the rest of the world. And what they all share is a passion to try to prevent other people from being scammed by the bad guys and failed by the bad pension providers. So this invaluable intelligence is freely available.

Until and unless the providers develop a conscience, they are going to continue to fuel the pension scam industry – and nothing will change. And the 79-page code might just as well be consigned to the bathrooms of Aegon, Aviva, Friends Life, Legal & General, Phoenix, Prudential, Royal London, Scottish Life, Scottish Widows, Standard Life and Zurich.

February 28, 2019
Justice Morgan’s Mad Mistake: Donna-Marie Hughes and Royal London Mutual Insurance Society
JUSTICE MORGAN’S MAD MISTAKE

(IN THE HIGH COURT OF JUSTICE, CHANCERY DIVISION)

The law is an ass – especially when it fails to protect pension scam victims

This judgement makes the law not just an ass, but a whole herd of donkeys.

Dear Justice Morgan

I refer to your judgment in the matter of Donna-Marie Hughes and Royal London Mutual Insurance Society Case Number CH/2015/0377 on 19th February 2016.

With absolutely no apology whatsoever, I must point out that your judgment – overturning the Pensions Ombudsman’s Determination in this matter – is so stark staring, raving mad that it verges on utterly bonkers.

In a number of complaints, the Ombudsman has found that although the legislation is missing a few key words, it is clear that a person should only transfer into an occupational scheme if they are genuinely employed by the sponsor of the scheme. The Ombudsman drew attention to the fact that the words “employed by the sponsor of the scheme” are, curiously, missing (obviously, whoever wrote that passage nipped out for a liquid lunch at the crucial moment). But he used his common sense and pointed out that it would be a “very strange result” if a person wanted to transfer into an occupational scheme without any employment relationship or arrangement with the sponsor.

It is my obligation to refer you to the fact that the industry, regulators, law enforcement agencies, courts, ombudsmen and victims (existing and future) desperately need the legislation to be tightened – not relaxed (or, as in this case, made completely impotent). This judgment has effectively given the green light for hundreds of scammers to scam innocent victims out of their hard-earned pensions.

History, since 2011, shows that various pension liberation scams including Ark (Lancaster, Portman, Cranbourne, Woodcroft, Tallton, Grosvenor) Capita Oak, Westminster, Evergreen, Salmon Enterprises, Eric’s Yard, Pennines, London Quantum, Headforte, Southlands etc., all share a collection of common traits:
1. They were set up, administered and promoted by unregulated firms
2. These firms obscure the identity of the team
3. The address of the firm is a virtual office
4. The assets of the scams being peddled include high risk, illiquid, speculative investments entirely unsuitable for pensions
5. Bogus “occupational” schemes are registered with HMRC and tPR (who do nothing to check that the sponsoring employers actually trade or employ anybody – or indeed even exist at all)
6. Pensions are liberated using a variety of “loan” structures which victims are assured are legitimate “loopholes”
7. Transfer and loan fees are extortionately high
8. Victims are promised unrealistic gains such as “guaranteed 8% return per annum”
9. Assets are entirely unsuitable for pension schemes and often include huge “kickbacks” for the introducers
The firms and individuals offering these schemes have included:
- Premier Pension Solutions in Spain (run by Tolleys Pensions Taxation author Stephen Ward – available on Amazon if you need a copy: http://www.amazon.com/Tolleys-Pensions-Taxation-2014-2015-Stephen/dp/0754549356)
- Gerard Associates http://www.gerardassociates.co.uk/
- Frost Financial
- Continental Wealth Management
- J. P. Sterling
- Viva Costa International
- Windsor Pensions
- Blu Debt Management
- Wealth Masters
- Paul Baxendale-Walker
- James Lau
Thousands of victims have lost £ billions and gained £ millions in tax liabilities. The assets of these schemes have included offshore property, store pods, car parking spaces, unregulated collective investments, eucalyptus forests, hedge funds, forex, Cape Verde etc.

Now, I am not saying that Bespoke Pension Services are scammers. http://bit.ly/1VGeSPn but on the back of their victory in the case of Ms. Hughes, there are a further 160 blocked pension transfers sitting with the Pensions Ombudsman. We have no way of knowing whether they will all be pension transfers invested in Cape Verde, but we do know the Hughes case must have been very important to Bespoke Pension Services’ business. After all, they must have invested a considerable amount in legal fees to take an £8,000 transfer attempt to the High Court.

Interestingly, Bespoke Pension Services are unregulated and their address is a virtual office. According to their latest published accounts the firm is insolvent. The two directors/shareholders – Mark Anthony Miserotti and Clive John Howells – have between them an impressive portfolio of investment, consultancy, property development, investment and financial planning companies – one of which is called “Fortaleza Investments” which suggests something Brazilian.

On the back of your judgment in respect of Royal London, there will be a serious problem for all the pension providers who performed so appallingly in Ark, Capita Oak, Westminster, Evergreen et al: the worst of which being Standard Life, Prudential, Scottish Widows, Aviva and Legal and General. Having handed over £ millions worth of pension funds since 2010 – in a lazy, negligent, box-ticking fashion – there is evidence that they are trying to mend their ways. Or there had been, until your judgment in the Hughes/Royal London/Bespoke Pension Services case.

I would draw your attention to Clause 53 in Justice Bean’s Ark ruling where he makes it clear that legislation wording must be interpreted intelligently – and not blindly.

He is obviously trying to make the point that it is essential to avoid an anomalous or unjust result from failing to look behind the intended meaning of wording. Indeed, the Pensions Ombudsman had already done that when looking at the wording when he said that he found that a transferee did need to be employed by the sponsor of an occupational scheme in order to avoid a “strange result”.

Your judgment has put at risk thousands of victims’ pensions. There have already been suicides, nervous breakdowns, life-threatening illnesses, broken marriages and families. There will be widespread poverty in retirement and many people will lose their homes. A strange result indeed – which does rather beg the question of how victims will get any protection or justice now?

This judgment makes the law not just an ass, but a whole herd of donkeys.

Regards, Angie Brooks
October 13, 2016
Pension Transfer decision from Ceding Provider to Pensions Ombudsman to the High Court

Pension Transfers are the cornerstone of pension scams. We expect to be looked after by the law, the large financial institutions and the government institutions such as ombudsmen but when they disagree our best interests often form the debris of the squabble. If you have saved for a pension, worked for years and years earnestly squirrelling away what you can for those golden years, you do not want to lose it. In fact that is what has happened to countless pension holders when they decided to transfer their pensions into what were presented as legitimate pension schemes. Some transfers were for liberation and some were to increase value of the pension. A recent High Court decision has opened the doors for scammer to legitimately roll out more of these scheme. Here is what happened when the High Court overruled the upright decision of the Pensions Ombudsman.

£8000 in a Secure Occupational Pension Scheme

Ms. Hughes was an Occupational pension holder with Royal London. Her Occupational Scheme was generated by the company she worked for and would have been available as a benefit of employment with that company. Had it been a contributory scheme both Ms.Hughes and her employer would have contributed to a fund which grows free of tax during the savings period. In non-contributory schemes, only Ms. Hughes’ employer contributes. The amount paid out to Ms. Hughes on her retirement will depend on the type of scheme and reflect either the contributions put in or the number of years’ service and the final salary of the employee. The main point of this is that the Occupational scheme is a benefit of employment with a particular company and this is managed by a trustee, in this case Royal London.

Royal London acts on behalf of the employee

Royal London is the largest mutual life, pensions and investment company in the UK. They are undoubtedly a secure pension trustee. They were the ceding provider for Ms. Hughes’ £8,359.71 occupational pension. As the pension trustee Royal London technically held the pension scheme’s assets for Ms.Hughes (the beneficiary of the occupational pension scheme). They act separately from Ms.Hughes’ employer for her benefit. Royal London’s powers are written in the trust deed and the scheme’s rules.

Bespoke Pension Services (Virtual Office)

Bespoke Pension Services made contact with Ms.Hughes through a cold calling operation First Review Pension Services, a UK promotor. Bespoke Pension Services claim to be ‘experts in pension scheme design, administration and regulatory pension guidance in the UK and EEA, including the Isle of Man’. They ‘design and implement pension schemes in the tax jurisdiction that is most advantageous to your requirements’. They do not have the same weight of reputation or confidence that a company such as Royal London have in the area of insurance and pensions.

The process starts with a Letter of Authority

Having engaged Bespoke Pension Services, they would have produced a Letter of Authority (LoA). This was sent to Ms. Hughes to complete, sign and return. She signed would have signed it. The LoA was then sent to Royal London (Ceding Scheme) to provide authority to Bespoke Pension Services to act on the client’s behalf. The LoA instructs the Ceding Scheme to send Ms. Hughes’ existing pension information (type of pension, investment structure, charging structure, growth rates, etc) to Bespoke Pension Services with Discharge Forms and Ms. Hughes’ pension documents.

To facilitate the Transfer Ms. Hughes needs her own company and a SSAS

In order to facilitate the transfer Ms. Hughes needed a company in her own name and so Babbacombe Road 1973 was set up for this purpose. This company is the sponsor for the SSAS Small Self Administered Scheme. This is a type of UK Occupational Pension Scheme which is trust based and established individually, usually by directors of limited companies for specified employees of the company. Babbacombe Road 1973 ltd. was possibly never intended to trade and was set up solely for the purposes of the pension transfer. All of the pension scams we have been dealig with to date have involved a bogus sponsoring employer which never traded or employed anyone

Royal London declined the Transfer

Royal London informed Ms. Hughes in September 2014, that they would not be able to facilitate the transfer to the Babbacombe Road 1973 SSAS. Through their investigations they were unable to confirm that the transfer would result in appropriate pension benefits for Ms. Hughes. They were also unable to determine that the scheme was a registered pension scheme. This was the first stumbling block for Bespoke Pensions Services and Ms. Hughes.

Bespoke Pension Services Apply to the Pensions Ombudsman

The Pensions Ombudsman settles disputes and acts within the laws set up for Pensions and Pension holders. They are an independent organisation for the moderation of pension administration. Ms. Hughes via BeSpoke Pension Services complained to the Pensions Ombudsman about Royal London’s decision to decline the pension transfer request. Anthony Arter, the Pensions Ombudsman, upheld Royal London’s decision describing it as “typical of one presenting itself across the pensions industry in relation to pension liberation”.

And finally…..to the High Court and the case is presented to Justice Morgan

Determined to put the transfer through for Ms. Hughes, the case is taken to the High Court by Bespoke Pension Services. Justice Morgan decided to overrule the Pensions Ombudsman’s decision and allow the pension transfer to go through. His decision was based on the wording of the legislation which in fact states that a member of an occupational pension scheme should have some sort of earnings/employment – but falls short of saying that the earnings/employment should be with the sponsor of the occupational scheme (to which a member is intending or attempting to transfer).

Pension Scammers will delight in this decision by Justice Morgan

Were this is a decision which only affected Ms. Hughes and her £8,359.71, it really would not be newsworthy at all. The fact of the matter is that it sets a precedent as an interpretation of the law surrounding many pension transfers. When the expertise of the pension trustees such as Royal London and the Pensions Ombudsman can be overrriden in this manner (i.e. an interpretation of legislative wording which is too weak and takes away the intelligence factor), you have to ask are whether ordinary pension holders in the UK are the first priority? Has this opened the flood gates for more fraudulent pension transfers? Have pension scammers been given the green light?

March 9, 2016
Pensions Ombudsman Squashed by High Court

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February 26, 2016