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Avacade, Alexandra Associates and the companies’ three managers have been ordered to pay over £10 million in restitution payments to consumers over an illegal transfer of £92 million in pension assets.
The Financial Conduct Authority (FCA) in June won a case against the two unregulated pension introducers over the asset transfer, FT Adviser reported.
The High Court ruled Avacade and Alexandra Associates and their managers, Craig Lummis, Lee Lummis and Raymond Fox, have conducted illegal activities, including offering investment advice and making false or deceptive claims. Avacade and Alexandra Associates are not regulated or authorised by the FCA to give pension services and financial advice to consumers.
The civil case against Avacade and Alexandra Associates alleged that the two companies were administering pension services, providing false statements and misleading consumers.
According to the civil case, Avacade and Alexandra Associates were persuading customers to illegally transfer their pension funds. Customers were convinced to convert their pensions into self-invested personal pensions and then into other investments like office space rentals, tree plantations or foreign property developments.
The consumers who worked with the unregulated firms transferred millions of pounds from their pensions to other investments in decisions influenced by the firms.
About £91.8 million was taken from over 2,000 consumers’ pensions and put into self-invested personal pensions, according to the FCA.
An estimated £68 million of the consumers’ money was contributed to Avacade’s promotional products, and £905,000 was contributed to Alexandra Associate’s Paraiba bond, a Brazilian property development bond.
Avacade and Alexandra Associates earned an estimated £10.8 million in commissions from the products they persuaded consumers to siphon money out of their personal pensions and place into their investments instead, the FCA reported.
On 30 June 2020, the High Court found Avacade and Alexandra Associates were providing illegal advice to consumers.
The firms engaged in unlawful activities that were not regulated by the FCA, including investment advice, unapproved promotions and contact with consumers promoting false claims.
According to the High Court, the Lummises and Fox knew about the illegal activities carried out by Avacade and Alexandra Associates.
A hearing was held 31 July 2020 to determine what the firms and their managers should have to pay in restitution to the consumers they illegally interacted with.
On 7 August 2020, Avacade, Alexandra Associates, Craig and Lee Lummis and Raymond Fox were ordered to pay over ten million pounds to the consumers the firms illegally gave financial advice to, the FCA announced.
Avacade was ordered to pay £10,000,000, and Alexandra Associates was ordered to pay £715,000.
Craig and Lee Lummis each will pay £2,500,000, and Raymond Fox will pay £1,700,000.
In addition to the restitution, the three managers are not allowed to conduct any regulated actions with consumers without the authorisation of the U.K. government. This includes financial promotions, false advertisements or misleading consumers into investments.
“Unregulated introducers, like Avacade, often try to skirt regulation by making false claims about the kind of service they provide,” the FCA’s Mark Steward said. “We urge consumers to avoid unregulated firms offering any kind of free pension review and only deal with firms which appear on the FCA register and who are permitted to provide pension advice.”
The FCA is moving forward to recover lost money from the defendants and rightfully give it back to them. Any consumer that engaged with Avacade or Alexandra Associate and lost money can contact the FCA.
Were you given advice from these unauthorised firms? Do you plan to seek legal representation? Let us know in the comments.
The plaintiff is represented by Adam Temple.
The Avacade/AA Civil Case is The Financial Conduct Authority v. Avacade Limited, et al., Case No: HC-2017-002628 in Royal Courts of Justice, London, United Kingdom.
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