The two unregulated pension introducers have been ordered by the High Court to repay clients after illegal SIPP transfers.
The High Court has this week ordered Avacade and Alexandra Associates to repay millions of pounds to former SIPP clients. The two introducers will have to return £10.7m to clients who were enticed into transferring their pensions into a SIPP, investing into high-risk schemes.
The High Court has also banned three directors of the firms – Craig Lummis, Lee Lummis and Raymond Fox – from engaging in regulated activities in the UK.
Subject to any appeals against the judgment, the FCA will now take steps to recover funds from the defendants in order to return money to the investors.
What did the unregulated introducers do?
The FCA filed civil proceedings against the two firms in November 2017 when it alleged the two introducers:
Made misleading statements;
Carried out regulated activities in the UK without FCA authorisation;
- Made financial promotions without the required authorisation
Both firms claimed to provide a pension report service. This was marketed at summarising a consumer’s pension information and retirement objective to help them decide what to do with their retirement assets.
The firms, which traded as Avacade Investment Options and Alexandra Associates before entering liquidation, then promoted self-invested personal pensions (SIPPs) and investments in alternative investments such as the tree plantations, the FCA said.
More than 2,000 investors affected
The FCA have stated that more than 2,000 consumers transferred £91.8m from their pensions into SIPPs sold by Avacade and Alexandra Associates. Most of these investments are now in liquidation, they added.
By selling these failed investments, the two firms earned commissions in the region of £10.8m. The FCA stated:
Approximately £68m of that [£91.8m] amount was invested in products promoted by Avacade and approximately £905,000 was invested into a product promoted by Alexandra Associates – the Paraiba bond – a fixed rate bond relating to a Brazilian property development.
Mark Steward, the FCA's executive director of enforcement and market oversight, said of the judgement:
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.
How can Smooth Commercial Law help?
Have you been a victim of Avacade’s or Alexandra Associate’s financial mis-selling? Smooth Commercial Law may be able to help you claim compensation.
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent, fraudulent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.