Berkeley Burke SIPPS – A SLIP OF THE TICK WITH THE SIPPS
We talk about the so-called “independent advisers” who sell scams to unwitting victims; we talk about the firms, introducers, cold-callers, lead generators, closers, couriers and transfer administrators. Many of the Pension Life blogs mention good old Stephen Ward – one of the leading scammers since 2010 – and we often try to make sure James Hadley doesn’t feel left out either.
However, there is another link in the pension scam chain that is often forgotten about – the trustees. A pension scam always starts with two sets of trustees: the ceding trustee which hands over the funds to the scammers and the receiving trustee which allows the scammers to do their work successfully.
Ceding trustees have been ticking boxes and handing out thousands of victims’ life savings for years – in complete defiance of warnings by HMRC, the Pensions Regulator and the Scorpion campaign. It really is too much trouble for ceding trustees to look for the blindingly obvious signs of a scam – and the people these firms employ are obviously not that bright. Rather than actually doing anything which involves the magic word “trust” (or the four-letter word “work”), it is much easier – and cheaper – just to hand the millions over to the scammers.
I dread to think how much the lazy, negligent ceding trustees spend on pencils every year for ticking boxes, and blindfolds for making sure the transfer admin staff don’t ever see the scam warnings. The worst performers are always the same old same old names:
Aegon, Aon, Aviva, DHL, Friends Provident, Legal & General, Norwich Union, Pearl Assurance, Prudential, Royal London, Royal Mail, Scottish Widows, Standard Life and Zurich.
Since the Ark and Salmon Enterprises pension scams back in 2010, these lazy box-ticking trustees must have got through thousands of pencils and blindfolds. In fact, one ceding provider – Nationwide – deliberately handed over a pension even after they had received confirmation that the receiving trustees had been arrested for fraud and money laundering (and were later jailed for eight years).
However, this blog is written to address the equally damning and disgusting behaviour of negligent trustees who are at the receiving end of a transfer by the scammers – and allow victims’ pension funds to be invested in toxic, high-risk crap which only serves to pay eye-watering commissions to the scammers. We must remember that if such trustees are negligent, the scammers are able to succeed – and financial crime is inevitably facilitated.
One such negligent trustee is Berkeley Burke SIPPS Administration Ltd. At the end of October 2018, Berkeley Burke appeared in the High Court at the behest of the Financial Ombudsman. The matter involved a complaint by one of their victims: Wayne Charlton – a gardener. I have never met Mr. Charlton, so know little or nothing about him. But I have met a few gardeners in my time – and I wouldn’t say that any of them came close to being sophisticated investors. So I think it is highly unlikely that Mr. Charlton knew anything about investing or had any experience of the highly complex world of investment strategies.
In 2011, Mr. Charlton applied to transfer his existing personal pension to Berkeley Burke and to use the money for investment in an investment scheme run by scammers. Of course, he didn’t know the scheme was a scam at the time – although it was unquestionably a UCIS fund which should not have been promoted to a retail pension saver at all (and Berkeley Burke ought to have known this). Over 600 other victims were also scammed into investing around £ 12,250,000 in SIPPs operated by Berkeley Burke. However, it transpired that the investment scheme was a scam. And all the money was lost – all because Berkeley Burke was too lazy, selfish, stupid and careless to carry out any basic due diligence. Not just in respect of Mr. Charlton, but in respect of all the other 600+ victims.
There were a few basic warning signs that Berkeley Burke deliberately ignored:
- The introducer was Mr. Stones of Big Pebble Limited. You would have thought that just the name: Big Pebble might have triggered at least a raised eyebrow. The firm was newly incorporated and had never traded.
- The SIPPS was invested in Sustainable ArgoEnergy plc (SA) – a “green oil” scheme in Cambodia (remember the Jatropha trees? – Gary West, James Whale and Stuart Stone, were convicted of fraud and bribery offences and sentenced to a total of 28 years imprisonment for this scam back in January 2018?). Just hearing the words “Cambodia” and acknowledging the basic fact that this was a high-risk, illiquid, unregulated fund ought to have been enough for Berkeley Burke to use some basic common sense and refuse the investment.
The core question that was considered in the High Court by Justice Jacobs, was whether Berkeley Burke acted fairly and reasonably by accepting Mr. Charlton’s SIPPS investment into non-existent Cambodian land and Jatropha trees.
The judge decided it was blooming obvious that this was an unsuitable investment for a pension fund. Whilst Berkeley Burke could not give financial advice, they did, however, have a duty of care to their client. Justice Jacobs concluded that Berkeley Burke “did not act fairly and reasonably” with regards to Mr. Charlton’s investment. The point was made that they should have questioned the investment and made further investigations into it, and that had they done so they would have deemed that the investment was totally unsuitable.
But of course, it was much easier to go “tick” and let Mr. Charlton and more than 600 other victims lose over £12 million worth of life savings.
So my motto for pension trustees for 2019 is: Don’t be a Berk or a Burke – put those ticks away!