It was found that Mr Garner had “acted dishonestly and in breach of his duty of no conflict, his duty not to profit, and his duty to act with prudence had breached his investment duties”, as well as failing “to exercise due skill and care” with respect to investment functions, and that investment of members’ pension pots in Norton preference shares “amounted to a fraud on the power of investment”.
The ombudsman ordered Mr Garner to make restorative payments to all scheme members, calculated with interest, as well as an additional £180,000 to the original 30 applicants for “exceptional maladministration causing injustice”.
Dalriada Trustees said in a statement: “The situation with the Norton Motorcycle schemes rightly led to a number of complaints being made to the Pensions Ombudsman, in particular with regard to the actions of the previous trustee and administrators.
“Dalriada made its own complaint to the Pensions Ombudsman in the interests of all members of the schemes, and was also included as a respondent to the members’ complaints for the purposes of carrying out the [ombudsman’s] directions.
“Dalriada has now had sight of the Pensions Ombudsman’s final determination and will look to comply with those directions accordingly.”
TPR’s effectiveness questioned
Responding to the decision by the ombudsman to uphold the complaints, Labour MP Stephen Timms, chair of the Work and Pensions Committee, said: “This will be a welcome vindication for those who have lost out – but it has been a long time coming.
“Any further delay will be all the more painful for savers because concerns about this scheme were being raised as long ago as 2014, but somehow even those alarm bells were not enough to prevent this outcome.
“This shocking case raises serious questions about the effectiveness of the regulators involved and the protections we have for people who fall victim to pension scams."
Mr Timms has twice written to TPR on the subject of the Norton schemes, requesting that the regulator answer a number of questions.
In his first letter, dated March of this year, Mr Timms sought clarity as to when the regulator first became aware of Mr Garner’s conflict of interest, and why no action was taken in the seven years following the establishment of the three affected schemes.
Now, in light of the ombudsman’s decision, he has requested further answers, not least as to how many other small schemes find themselves in similar positions, how many conflicts of interest have been raised with TPR since 2013, and whether the regulator now intends to carry out a wide review of the arrangements of smaller schemes with the aim of reassuring savers.