Utmost (formerly Generali) is proposing buying Quilter (formerly Old Mutual). The deal is due to be completed by December 2021. The agreed price is nearly half a billion pounds. It is reported that Margrethe Vestager, Vice President of the European Commission, has “approved” this acquisition.
The “approval” by the European Commission of this deal is an insult to thousands of victims of pension and investment fraud. Widespread financial crime has been facilitated, encouraged and rewarded by Utmost and Quilter over the past decade. The appalling result has been the destruction of millions of pounds’ worth of life savings and pensions.
Margrethe Vestager, EU Commissioner Executive Vice President, has proved that the Commission hasn’t got a clue about Utmost’s and Quilter’s role in offshore financial services fraud. And this deal between these two death offices will create a monopoly over fraud against expats in Europe.
For death offices – such as Utmost and Quilter – fraud against expats is clearly a lucrative business with a huge market. The horrific damage – including distress, poverty and suicide – gives neither Utmost’s CEO Paul Thompson nor Quilter’s CEO Paul Feeney any cause for concern. Thompson has described the proposed acquisition as:
“highly attractive and in line with our growth strategy”.
But growing an industry based on fraud should neither be countenanced by the European Commission – nor the European Markets and Securities Authority.
Utmost Fraud approved by EU Commission
Utmost announced the planned takeover in April 2021. CEO Paul Thompson has bragged this would add £22 billion and 90,000 policies to its existing portfolio. This would give the Utmost/Quilter combo a total of £58 billion of funds. And much of this will have been acquired through fraud. It will also give them 600,000 “customers”. And many of these will have been victims of fraud – some of them currently on the verge of suicide.
The toxic assets and suicidal victims result from Utmost’s and Quilter’s long-standing practice of giving terms of business to unlicensed scammers. These death offices have paid huge, undeserved and undisclosed commissions to these scammers for more than a decade. And there is no sign that there is any intention to pay redress to the thousands of victims who have lost their life savings and pensions in death bonds.
The Commission’s approval of this iniquitous acquisition is a grave insult to Utmost’s and Quilter’s existing victims. It also puts thousands of British expats across Europe at risk of becoming future victims of the fraudsters to whom the death offices give terms of business.
There are three clear strands to the fraud with which both Utmost and Quilter are undeniably complicit:
1. The insurance bond – also known as a life, portfolio, or offshore bond. This is the core “product” routinely used and abused by the unethical sector of the offshore financial services market. This toxic sector – which includes many known scammers – sells products and not advice. Bonds can – under certain, limited circumstances – play a valid tax-mitigation role in the UK. But offshore, they serve zero purpose – other than to pay commissions to many unauthorised introducers and fraudsters posing as advisers. Insurance bonds should never be used with offshore pensions (QROPS) since the pension is already a tax “wrapper” in its own right.
2. The terms of the insurance bonds are clearly abusive to consumers as retail, inexperienced investors. The high charges are mostly for the purpose of clawing back the concealed commissions paid to the introducers (many of whom are unauthorised). Utmost and Quilter had known for years that large numbers of these introducers had no license to provide insurance mediation or investment advice. They had also known that these same introducers had long-established track records of mis-selling and fraud. And yet Utmost and Quilter continued to give them terms of business. They allowed them to invest thousands of victims’ pensions and life savings recklessly – and disastrously.
3. The toxic, illiquid, high-risk “investments” offered by the death offices. These products were offered on the death offices’ platforms for the scammers to sell to their victims. Investment products have included dozens of failed funds such as LM, Axiom, Premier New Earth, Quadris Forestry and Kijani. Worse still are the professional-investor-only structured notes supplied by Leonteq, Commerzbank, Royal Bank of Canada and Nomura.
This toxic “triptych” has resulted in horrific losses for thousands of victims over the past ten years. And if this iniquitous acquisition goes ahead, there will be just as many – if not more – casualties in the next ten years. The EU Commission – along with ESMA – will be complicit.
Of course, I might be entirely wrong: Utmost’s half a billion might have been subject to a sequestration deal enforced by the Commission. Perhaps this money is going to be used to repay all the victims the hard-earned money they have lost? And any surplus used to prosecute the dozens of fraudsters to whom the death offices had given terms of business? (Sadly, I am not often wrong).
Death offices Utmost and Quilter (as well as FPI and RL360) have routinely given terms of business to known scammers and unlicensed salesmen posing as advisers since 2010. They have created a toxic industry of selling dodgy products – not professional financial advice. The result has been predictably awful. Victims have paid the price with poverty and misery in retirement. Utmost’s acquisition of Quilter is likely to result in a huge increase in this widespread crime.
The facts behind this perilous situation are irrefutable. Quilter itself is suing Leonteq for £200 million for just one series of high-risk structured notes. This was for an extra 2% hidden commission on top of the 6% hidden commission allowed by Quilter. Chief Executives Peter Kenny and Paul Feeney know that these toxic products should never have been promoted to retail, naive investors. Kenny and Feeney are fully aware that their unlicensed introducers will sell any toxic and high-commission crap to their victims.
In 2016, Quilter provided hundreds of these toxic Leonteq structured notes (with total concealed commissions of up to 14.57%) to distributors such as Satori, Mayfields and Morgan Capital. Quilter also sold these notes to known, serial scammers Square Mile International. In the same year, Utmost sold the same Leonteq notes with hidden commissions of over 12%.
Utmost Fraud approved by EU Commission
The EU Commission needs to understand why Utmost’s proposed acquisition should not go ahead. In their Introducer Terms of Business Agreement, Utmost opens with a false statement:
“Following completion of due diligence we are pleased to confirm your terms of business have been authorised on the following commission basis”.
But there is no due diligence. There are no checks on how the firms are licensed, or whether any of the staff or sub agents are qualified to provide insurance or investment advice. And certainly no acknowledgement that the commissions must be openly disclosed to the victims.
The starting point for the hidden commissions is that 140% of the victims’ portfolio will form the basis for the payment. A fact which is never disclosed to the victims.
The Utmost Introducer Agreement requests details of the applicant’s experience and qualifications, in addition to membership of professional bodies or trade associations. The application form also asks for confirmation of regulatory status in the markets where the firm operates. They also ask for details and proof of professional indemnity insurance. Therefore, Utmost acknowledges that these are essential factors for a legitimate introducer. They willingly enter into terms of business with many unlicensed, unqualified scammers. These scammers have no experience, qualifications, membership of professional bodies or trade associations, and no essential regulatory status. They also have no professional indemnity insurance.
In 2014, Utmost accepted one bond application from a victim resident in Spain. Her “adviser” (introducer) had no license to provide either insurance mediation or investment advice anywhere in Europe. And yet Utmost gave this firm complete freedom to invest the victim’s funds – accepting 19 separate investment dealing instructions (mostly with forged client signatures) totalling 529,251.80 Euros. All of the investments were professional-investor-only, high-risk structured notes provided by Leonteq, Commerzbank, Royal Bank of Canada and Nomura. Between 2014 and 2018, Utmost and the scammer between them destroyed over 75% of the victim’s fund. The destruction was caused by repeated structured note failures and the inexorable high charges by Utmost. When the victim finally took out what little was left, Utmost charged her a hefty early-exit penalty. There was no recognition of the horrific destruction Utmost had facilitated.
Criminal proceedings against this, and other associated firms, are now in progress in Spain. However, the main lead complainant – also an Utmost victim who lost most of his portfolio – has recently died. Much of his life savings and pension – which started out at three quarters of a million pounds – were destroyed by Utmost and the scammer. The causes of the losses were not only the toxic structured notes but also some unregulated, professional-investor-only funds such as the Quadris Brazilian Teak Forestry Fund. The deceased victim’s disabled widow is now facing poverty on top of bereavement.
Of course, Quilter has performed just as atrociously as Utmost over the past decade. Thousands of Quilter’s victims are facing similar poverty and suffering at the hands of the same scammers. This fraud is facilitated and rewarded by hidden commissions and the freedom to invest portfolios without the victims’ knowledge, using forged client signatures. With similar callousness, Quilter has allowed the flotsam and jetsam of the offshore cowboys to commit the exact same type of fraud as Utmost has.
One such scammer – with Quilter terms of business – boasts that his qualification to work in financial services is working as a bar manager and managing a successful sales company:
https://pennickblackwell.com/pennick-blackwell-team/
(formerly an agent of AES International and now an agent of Abbey Wealth)
It looks like our horror story is about to get worse.
Angie is known for calling out the scammers and she is right to call them out – no one else seems to! However, in this post she is calling out the European Commission for approving a merger between two big insurance companies that she alleges, facilitated financial crime (more on this later).
However, in my opinion, she is calling out the wrong people.
Merger or no merger, I doubt it makes any difference to the victims, who were predominantly expats, of the scam orchestrated by these insurers over the past decade. The victims will remain financially ruined whether the two companies merge or not.
Angie says, “Margrethe Vestager … has proved that the EU Commission hasn’t got a clue about Utmost’s and Quilter’s role in offshore financial services fraud” but in all honesty, whether Vestager has a clue or not, she can hardly make a decision on a merger based on the allegations of some expat living in Spain. The fact of the matter is, these insurance companies and their guilt or otherwise, remains unproven in any court. However, that said, one group of victims, part of a class action led by Niall Coburn, are supposedly taking legal action in the Isle of Man against Quilter and Friends Provident International(“FPI”).
Niall submitted written testimony describing this action to the Paliamentary Inquiry into Pension scams[1] and there is an investigation report he authored in 2017 on his website[2]. There was some news media reports[3] of this class action in mid 2020 but everything has gone quiet since. Where it’s at I have no idea.
In my opinion Angie would have been far better to call out the UK Work & Pensions Committee members[4 & 5] and some witnesses that contributed to that committee, for no one in that Parliamentary Inquiry, set up at the end of 2020 specifically to focus on Pension Scams, mentioned either Quilter et. al. or the damage done to expats over the past decade! Nor is this given any real estate in the report[6].
On 16th September, 2020, the first oral session of that committee, a number of professionals in the industry gave evidence. Two of those, Andy Agathangelou, founder of the Transparency Task Force(“TTF”) and Margaret Snowden, Chair of the Pension Scams Industry Group(“PSIG”) both failed to mention anything about the role of big insurance giants (Quilter, formerly Old Mutual and FPI) in pension scams. Both big household names and PSIG actually has “Pension Scams” in its title!
To summarise Coburn’s case[1 & 2], these insurance companies, circumvented UK regulations and sold inappropriate investment products wrapped in inappropriate insurance bonds to vulnerable expats for considerable commercial gain and knew, or ought to have known the disastrous outcomes these would have. Angie says pretty much the same thing in her points 1,2 & 3.
When LC&F collapsed spectacularly in January 2019 there was a media frenzy. Nicky Morgan MP, Chair of the Teeasury Select Committee wrote to the FCA Board a couple of months later[8], ordering an investigation. The committee set up to look into Pension Scams couldn’t even discuss the role of the big insurers in pension scams of the past decade let alone recommend an investigation!
Angie alleges the insurance companies “facilitated financial crime.” I don’t know about “crime” but in my opinion, definitely they should be asked to defend tortious liability – which is in essence what Niall Coburn’s action pleads. However I do have issues with Coburn’s case described by [1 & 2].
No one has yet had the courage to come out and just say it: in my opinion, the insurers actually intended to target retail investors. In my opinion that was their business plan from the get-go.
Although the application from [mis-]advisers required they be licensed and the insurers didn’t check, in my opinion it was never intended they would be licensed. Although the investments were not suitable for retail investors, in my opinion it was always intended they would be promoted to retail investors.
The reasoning is obvious. The insurers needed volume. That volume came from the large numbers of expat retail clients and especially from their pensions – there are insufficient sophisticated or professional investors to give the required volume. Appropriately qualified and licensed advisers would not recommend these products to retail clients so it was a necessary condition the [mis-]advisers not be qualified or licensed.
To make it worthwhile to [mis-]advisers, the investments have to be offering high commissions and high returns to investors (seducing the unsophisticated) so they have to be high risk, unregulated rubbish.
In my opinion it stands to reason this was the plan all along.
In another of Angie’s blogs[9] from August 2020 she says:”I predict that the death offices will try to … blame the failed investments on their inappropriate advice”. Which, on the face of it seems a reasonable defence since the advisers are guilty of tort by deceit.
It is easy to show the duty of care was owed to the investors by the [mis-]advisers, who fraudulently misrepresented their skill and knowledge, puporting to be IFA’s; the investors relied on their skill and knowledge and it was reasonable for them to do so and it was intended the investors would act on the [mis-]advice.
So it is easy to show a duty of care existed and was breached by the [mis-]advisers. I am sure that if evidence can be found that the intention by the insurers was to recruit unqualified/unlicensed advisers and target retail investors then you probably have a good case for fraud.
This, however, is not exactly the case Coburn seems to be advancing. There is no other case so publicly described as Coburn’s but I am of the opinion any others are going to be pretty much the same as Coburn’s.
One plea by Coburn is the insurers are vicariously liable for the behaviour of their agents (the advisers) however I am not convinced for the same reasons in the Ingenious Media Ltd. litigation[10] §83 &84. I’m not going into it here. People can easily read it for themselves and make their own minds up.
Whilst I have issues with Coburn’s action against Quilter and FPI, it really is the only game in town but has been very quiet for a year and with no recent updates I fear it may have fallen by the wayside. Apart from Angie’s legal action against [mis-]advisers in Spain re Continental Wealth Management, no one else is doing anything for existing victims.
PSIG made a disappointing written submission for the Parliamentary Inquiry[11].
They said in the Executive Summary Page 1: “.. estimate £10bn lost [to pension scams] but the focus should be on preventing more not recovering the £10bn”. Seriously? I doubt Margaret would be saying that if she was herself a victim facing financial ruin.
No one, it seems, is interested in trying to recover victim’s ruined lives – except Angie and Coburn. Not even a Parliamentary Inquiry specifically focused on pension scams! Victims are definitely on their own and what’s worse, expat victims aren’t even on the “official” radar!
This is what Angie should be calling out in my opinion!
References:
[1] Coburn’s submission to Parliamentary Inquiry:
https://committees.parliament.uk/writtenevidence/20898/html/
[2] https://coburnci.com/wp-content/uploads/2020/03/Investigation-report-Portfolio-Bond-Final-28-February-2017.pdf.pdf
[3] Media Articles on Coburn’s Law Suit (from June 2020):
https://www.ftadviser.com/investments/2020/06/10/quilter-and-friends-provident-face-100m-misselling-claim/
and:
https://international-adviser.com/investors-launch-legal-claim-against-two-life-insurance-giants/
[4] https://committees.parliament.uk/committee/164/work-and-pensions-committee/membership/
[5] Parliamentary Inquiry Committee membership 2020
https://en.wikipedia.org/wiki/Work_and_Pensions_Select_Committee#Membership_(2020-present)
[6] Parliamentary Inquiry Report 24 March 2021:
https://committees.parliament.uk/publications/5322/documents/53036/default/
[7] Parliamentary Inquiry Pension Scams Oral evidence 16 Sep 2020
https://committees.parliament.uk/event/2014/formal-meeting-oral-evidence-session/
[8] https://committees.parliament.uk/committee/158/treasury-committee/news/98790/nicky-morgan-asks-fca-to-investigate-events-at-london-capital-and-finance/
[9]https://pension-life.com/international-adviser-awards-quilter-investment-scams/
[10] Coutts & Nat West judgement §83 & 84. in what was called the Ingenious Media Ltd. litigation
https://www.bailii.org/ew/cases/EWHC/Ch/2019/3299.html
[11] PSIG’s submission to Parliamentary Inquiry:-
https://committees.parliament.uk/writtenevidence/11225/default/
I think there are some elephants in the room – big stinky ones. Remember that one of the top geezers at Quilter is on an FCA panel. Remember that the BBC tried to derail the Spanish criminal case. Remember that Margaret Snowdon makes her money by giving awards and accreditations to the ceding providers to the companies who hand the funds over to the scammers. Remember that Boris Johnson has victims (whom he promised – falsely – to “help”) in his own constituency. Remember that few of the press or media outlets do high-viz stuff about Brits getting defrauded out of their pensions and life savings. Remember that the BBC said it “wasn’t sexy enough” to broadcast. What has Stephen Timms achieved? What has PSIG achieved? You’ve got repeat, well-known scammers driving around in their Bentleys and Chelsea Tractors and boasting about their country mansions and yachts – free as a bird. You’ve got a hopeless SFO which achieves SFA. And a non-existent Action Fraud. The elephant is that nobody wants to do anything, because it is easier to say nothing (perhaps tut a bit), do nothing, broadcast or print as little as possible, and pretend it will go away and that it is somebody else’s problem. Chaps in the House of Commons or Lords could stroll down to Quilter’s offices and give them a slap on the wrist with a waggly willy if they cared – but do they bother? No chance!
I agree it is easier to say nothing and do nothing and print/broadcast as little as possible.
I am also of the opinion no one (bar you) has the courage to print or say anything against the insurers for fear of legal action. I believe these big insurers would not think twice about taking on the BBC or a National paper – unlike the bottom feeders like Nunn & McCreesh, or Square Mile who don’t have the resources to take on the BBC. What’s bizarre however, is the Parliamentary Inquiry has “parliamentary privilege” … but still they never mentioned it.
Timms (along with the committee members) have achieved nothing but they obviously believe they have “done a good job”. They can tick the box – “job done” now file it in the round bin and forget it, move onto the next topic.
However you, David Parry and Coburn are doing “something” (although I am not sure about Parry other than what I gleaned when he accidentally included me on an email moaning about you pulling support and jeopardising his class action) even if you three are not flying in formation but instead appear to be throwing rocks at each other. But that’s another story.
No one bothers because no one cares. The BBC is right – it isn’t “sexy” enough because non-victims really have zero sympathy for victims.
You just can’t sell the story to the non-victim population. No one cares.
PS I don’t remember the BBC trying to derail the Spanish case if I’m honest ….
Hi Stephen,
our case is advancing we just won the strike out application by FPI and waiting for approval from a funder. Can inform you contact me on [email protected]
I think it would be good to know more about how your case is going as there may be more victims out there who would jump at the chance to join the action.