The Financial Services Compensation Scheme has suspended its investigation against two advice companies linked to a £21m pension scam after it found no evidence that the firms were aware of the nature of the scam.
In May 2018, Fast Pensions, which acted as sponsoring employer for 15 retirement schemes, was closed down in the High Court, alongside five other companies associated with it.
The companies and the trustee of the schemes were wound up in the public interest after they were found to have “been used to abuse millions of pounds of people’s savings”, according to the Insolvency Service at the time.
It found between 2012 and 2013, 520 people were encouraged to transfer their pension savings from existing providers into one of 15 schemes, with Fast Pensions acting as the sponsoring employer.
Some individuals received cold calls offering free pension reviews, while others were told that they could get a loan if they transferred their pension savings to one of the Fast Pensions schemes.
In some cases pension funds were invested into high risk investments, some of which have become illiquid, which means they cannot currently be sold or traded.
Following this the FSCS began accepting claims against 1 Stop Financial Services and Douglas Baillie Ltd, which gave advice to clients to transfer their pensions into one of the 15 schemes.
But in an update on its website, published this week (January 7), the lifeboat scheme announced that it has suspended its investigation against Fast Pensions as no evidence was found to show that FCA-authorised or regulated firms were aware of its actions regarding pension money.
This means that its investigation into the two advice firms has also come to a close as it was unable to establish that the firms owed its customers a civil liability regarding the pension transfers.
In April 2014, Andrew Rees and Timothy Hughes, partners at 1 Stop Financial Services, were banned by the Financial Conduct Authority from "performing any significant influence function in relation to any regulated activity".
This came after the FCA found they had advised customers to switch into self-invested personal pensions which enabled them to invest in unregulated and high risk products.
Following this, 1 Stop Financial Services ceased trading and applied to cancel its FCA permissions.
Douglas Baillie suspended the operation of its pension switching business,The Pension Specialists, in October 2013 following concerns raised by the FCA.
It later entered liquidation in 2016 and was unauthorised by the FCA in November 2016.
In total the FSCS received four claims in relation to Fast Pensions, two against Douglas Baillie and one against 1 Stop Financial Services.
The FSCS is able to restart its investigation in relation to Fast Pensions if it finds new evidence against any FCA-authorised advisers.
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