Rogue advisers ordered to pay £11m to pension transfer victims

Pension savers who were persuaded to transfer their retirement funds by unlawful financial advisers will receive £10.7m in restitution, following a High Court ruling.

Two pension firms – Avacade Future Solutions and Alexandra Associates –  have been ordered to pay money to members of the public who were convinced to transfer their savings into self-invested personal pensions.

Court documents show that 1,943 investors transferred £87m of savings into Sipps after engaging with the firms. Avocado earned commission and fees worth between 6.3pc and 20.3pc of the money transferred.

Savers were induced to transfer their pensions into high-risk schemes, such as tree plantations in Costa Rica and residential developments in Brazil. Despite the restitution payments, victims will likely face large losses.

A court judgement in June ruled that Avacade and AA had unlawfully offered advice and arranged pensions transfer when they did not have permission to do so.

The two companies also used illegal financial promotions and provided false or misleading information to their customers.

Courts have now ordered the two firms and three directors –  Craig Lummis, Lee Lummis and Raymond Fox – to pay restitution of £10.7m. The Lummises and Mr Fox have been banned from offering financial services to consumers, as has AA. Avacade commenced liquidation proceedings in 2015.

The case was brought by the City watchdog, the Financial Conduct Authority.

Mark Steward, of the regulator, said: “The FCA will make wrongdoers financially accountable to consumers whom, as the Court recognises in this decision, ‘…include elderly and vulnerable citizens who have paid their due share of income tax, made sacrifices, and taken prudential decisions for their future retirement over the course of an honest working life’.”

The FCA has urged any victims who have not already been contacted about these rogue pension transfers to contact it immediately. Subject to any appeals, the regulator will then return cash to investors.