Three directors of a payday loan company who used money from a pension liberation scheme to pay off company debts have been banned for a total of 20 years.
The directors of Speed-e-Loans Limited have all been disqualified from acting as directors after breaching their fiduciary duties, their duties of care, skill and diligence.
The Insolvency Service found Philip Miller caused the company to receive funds from private investors through pension liberation schemes at a time when SEL was not solvent and had ceased lending to new clients.
An investigation found Mr Miller's son, Daniel, and Robert Alan Davies, allowed this to happen.
SEL, an Essex-based company, traded as a payday loan provider from February 2010 until July 2012, when it’s then managing director was suspended.
A new managing director was appointed and SEL ceased lending to new clients by August 2012 and at a board meeting the directors sought new opportunities for the investment of new moneys into SEL.
Mr Miller Sr proposed that SEL would receive money from a pensions liberation scheme set up by third party brokers.
SEL was to be the investment through which members of the public derived guaranteed annual dividend payments of 5 per cent as well as a guaranteed return of the whole of their “investments” in 10 years.
The terms were that SEL would receive 54 per cent of the money provided by the public but be contractually obliged to repay 100 per cent plus that annual 5 per cent dividend. The board agreed by majority to the proposals and set in place the necessary pension trusts and paperwork.
From October 2012, members of the public invested at least £2.6m, of which at least £1.2m was received by SEL, and none of which was used by it to trade. This money was used to meet existing debt repayments of SEL.
Cheryl Lambert, chief investigator at the Insolvency Service, said: "The directors were collectively, and at the kindest interpretation, recklessly negligent in their desperation to save the company.
"None of them asked simple, obvious questions when it should have been clear to them the brokers were taking nearly 50 per cent in fees, nor the type of scheme they had become involved with and the individuals who were pushing the scheme.
"Philip Miller, the proposer and principal character, stood to gain financially from individual the transactions through a commission and so his actions demand the harshest criticism.
"Taking action against the people most responsible is a warning to all directors that such behaviour will attract in a very significant sanction. You cannot hide behind a lack of technical knowledge of specialist schemes – you have to exercise independent and critical thought."
In January 2013 SEL became aware that one of the brokers responsible for the scheme was on trial for fraud but continued receiving investments until May 2013.
During May 2013 a BBC documentary was shown raising concerns over these schemes and SEL sought professional advice and entered into administration in June 2013.
At administration, SEL had assets listed at £150,269 and liabilities to creditors of £4,364,313.
Mr Miller Sr has been disqualified for nine years, Mr Miller Jr for five years and Mr Davies for six years.
damian.fantato@ft.com
