Dodgy pension liberation firm wound up

A PRESTON-based company which illegally operated as a pension liberation scheme has been wound up in the High Court, after more than £3.3m was invested.

Clients of Thames Trustees Ltd were induced to move their existing pension funds into the Westminster Pension Scheme, for which Thames acted as a trustee, on the basis that they would receive in return a cash payment.

This would be in the form of a ‘loan’ from an associated company (typically of 50% of the funds) or from commission on investments made by Thames Trustees on behalf of the scheme.

In fact, there was never any intention that the loans received by clients would be repaid and the scheme, instead, operated as a pension liberation scheme providing clients with earlier access to pension funds than is permitted by the Finance Act 2004.

An investigation by the Insolvency Service established that 79 members joined the scheme and invested an aggregate of £3.3m by transferring their existing pension scheme investments into it.

The court found that the company had operated with a lack of transparency and that the recorded directors of the company had no knowledge of the activities of the company or the investment of the monies received by the company on behalf of the scheme.

Those in actual control of the company gave conflicting explanations about their roles and had received significant commission payments which were deducted from the funds transferred into the scheme by clients, without the prior knowledge of those clients.

The court also found that the investments made with the scheme funds were not made for a true commercial purpose and there were significant discrepancies in the documentation associated with the investments. Some investments were in an unsuccessful land development in Florida, while others were in an unregulated collective investment scheme suitable only for sophisticated investors.

Colin Cronin, investigation supervisor with the Insolvency Service, said: “The structure of this pension liberation scheme was deliberately opaque and the lack of transparency was added to by the failure of those in control of the company to fully cooperate with the investigation.

“The operation of the scheme was highly prejudicial to the clients who were required to invest their pension funds into it in order to obtain the early release of part of those funds. The balance of funds were not legitimately invested as clients were led to believe.”

The company was wound up on 11 July 2016 and the official receiver has been appointed as liquidator.