The High Court has ordered two unregulated introducers and their managers to pay back £10.7m to clients who were missold pensions.
In a case brought by the FCA, the High Court ordered the introducers to pay restitution to clients who were persuaded to transfer their pensions into a self-invested personal pension in order to invest in alternative assets such as tree plantations and Brazilian property developments
In addition, Alexandra Associates, and the three directors have been banned from engaging in regulated activities in the UK.
Mark Steward, the FCA's executive director of enforcement and market oversight, 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"
Avacade entered liquidation in November 2015. In a decision handed down in June, the court found the activities of unregulated firms Avacade Limited and Alexandra Associates, as well as their directors, Craig Lummis, Lee Lummis and Raymond Fox, were unlawful as they had advised on investments, made unapproved financial promotions and made false or misleading statements.
According to the regulator more than 2,000 clients transferred in the region of £91.8m from their pensions into Sipps.
Approximately £68m of that amount was invested in products promoted by Avacade and approximately £905,000 was invested into a product promoted by Alexandra Associates, a fixed rate bond relating to a Brazilian property development.
From these investments the unregulated firms earned commissions in the region of £10.8m.
Subject to any appeals against the judgment, the FCA will take steps to recover the funds so they can be returned to the investors.
FTAdviser understands that Alexandra Associates, along with Craig and Lee Lummis, are considering the grounds for appealing the decision.
Their solicitor Omid Khub of Zakery Khub Solicitors said: “Our clients are extremely disappointed about [the] decision. However, they sympathise greatly with those who have lost money on any investments.
“Our clients operated as an introducer to a number of FCA regulated Sipp companies and IFAs. Those FCA regulated companies (and not our clients) invested investors' money only after approving the investments, and in some circumstances, only after advising upon those investments.
“[The] judgement therefore is an important judgment for anyone in the financial services sector that relies on introducers.”
amy.austin@ft.com
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