SIPPs mis-selling has been a rising problem in recent years, with increasing numbers of financial firms coming under fire for their mis-sold pensions.
Avacade and Alexandra Associates are the latest to be fined, after a court case brought against them by the FCA. Here’s more information.
What had Avacade and Alexandra Associates done?
The Court decreed that Avacade and Alexandra Associates had acted unlawfully in the following ways:
- They’d made unapproved promotions about pensions via their websites
- They’d made misleading statements to consumers
- They’d made unapproved promotions via telephone calls and other marketing material
The firms had acted as ‘introducers’ – getting in touch with potential customers and encouraging them to swap their existing pension for a SIPP. More than 2,000 consumers transferred their funds; a sum that equalled around £91.9million in total.
What was the money invested in?
£68million of the money was invested into Avacade’s promoted products, while another £905,000 was invested in an Alexandra Associates promotion, which related to a property development in Brazil. These investments were far higher risk than many of their clients were aware of, and when they underperformed, the value of the investments went down – losing money in the process.
The repercussions of mis-selling SIPPs
The Court ordered both firms to compensate their clients, in a pay-back totalling £10.7million. It also stated that Alexandra Associates (and its three directors, Lee Lummis, Craig Lummis and Raymond Fox) would be banned from undertaking regulated financial activities in the country.
The decision was welcomed by the FCA, who had brought the case against the two firms. Mark Steward, executive director of enforcement and market oversight for the FCA, commented: “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 of the course of an honest working life.”
Avacade has now gone into liquidation. However, Alexandra Associates are anticipated to appeal the decision.
Omid Khub, who is acting as solicitor for the company, emphasised that the directors felt sympathy for those who had lost money, but thought that the overall ruling was unfair. He stated: “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.”
Have you been mis-sold your SIPP?
SIPP mis-selling can result in serious loss of funds for your retirement. If you’re a client of Avacade or Alexandra Associates, you may be in a position to seek compensation. The same is true if you’ve experienced any of the following from your financial advisor:
- You were given misleading information about the pension product
- The financial risks weren’t explained properly
- Your attitude to risk wasn’t assessed
- You felt coerced into agreeing to move your pension to a SIPP
If this sounds familiar, get in touch with Goodwin Barrett today on 0808 163 1659 today or email email@example.com. Our team are here to get you compensation if you’ve been mis-sold to.