The Pensions Regulator (TPR) has banned two men who allegedly allowed savers’ money to be invested in eucalyptus farms, hotel rooms on an African island and car park bays, from acting as pension trustees.
According to a statement issued today (29 October), Stephen Alexander Ward and Anthony Salih are believed to have allowed millions of pounds of transferred funds held in their trust to be put into exotic, high risk and suspected scam investments.
TPR’s determinations panel said both men lacked the competence and capability to be trustees, and described Mr Ward as reckless and lacking in integrity.
Both men were warned they could be jailed if they were found to act as a pension scheme trustee in the future.
The men were directors of Dorrixo Alliance, which acted as trustee for the London Quantum pension scheme.
Between April 2014 and June 2015, hundreds of people were approached by introducers being paid commissions to try to persuade them into transferring their funds to the London Quantum scheme for investment in exotic sounding propositions, the watchdog alleged.
According to TPR, more than 90 people had transferred their pensions, worth in excess of £6m.
Hundreds of thousands of pounds were then paid out to Dorrixo, to introducers and to a business providing administration and marketing services, according to TPR.
But while many of the members believed their funds were being put into low or medium risk investments, in truth the funds were going into high-risk, high-cost illiquid investments that paid large commissions to introducers, TPR stated.
Concerns over the security and quality of the investments and over the governance and administration of the London Quantum scheme had led the regulator to appoint Dalriada Trustees as an independent trustee replacing Dorrixo.
The regulator deemed Mr Ward’s behaviour to have been reckless and said he had demonstrated a lack of integrity, as he had failed to investigate an inappropriate employer-related investment that should have been obvious to him as a professional trustee.
It also found he had a serious lack of competence and capability to be a trustee. Mr Ward did not appeal his ban.
TPR’s panel also alleged that Mr Salih lacked the competence and capability to be a trustee.
Mr Salih launched an appeal in February to the Upper Tribunal against his prohibition, but abandoned this seven months later, ahead of a hearing. TPR had made clear throughout the process that it would defend its case against Mr Salih robustly.
According to Nicola Parish, TPR’s executive director of frontline regulation, Mr Ward and Mr Salih "put millions of pounds of other people’s money at risk and have neither the knowledge nor the skills needed to run a pension scheme".
She said: "Trustees play a vital role as the first line of defence for pension schemes but these two men allowed huge sums to be invested into high risk, exotic investments that bear all the hallmarks of being scams.
"As this case shows, we will take action to replace trustees if we believe they are putting scheme funds at risk and will ban those who are not fit to perform such an important task –pursuing cases right the way through the courts if that is what it takes to get the right result."
The regulator has been increasing its action on pension scams in recent years. FTAdviser reported last week that the "mastermind" behind a £13.7m pension scam was banned from being a trustee of pension schemes and a company director.
maria.espadinha@ft.com
