The Insolvency Service has shut down two trustee companies after an investigation found they had failed to seek independent investment advice, comply with their own governance statements, and adhere to regulation.
The two companies, Gleeson Bessent Trustee Services and Gleeson Bessent Trustees, approved investments and offered them to the general public through an introducer and sub-introducer network.
Members of the public who decided to take up the investment offering were charged up to £1,645 as an initial fee, plus an annual management charge (AMC) as high as £2,500. Over three years, the firms collected more than £3.5m from fees across nine occupational pension schemes.
The companies did not ensure share certificates were given where investments were made, were not transparent about investments being high risk, and members of the schemes were offered "contrived and artificial employment" to comply with guidance.
Gleeson Bessent Trustee Services administered the schemes, while Gleeson Bessent Trustees sat as a trustee on three of those schemes: the Focusplay Retirement Benefit Scheme, the Focusplay No 2 Retirement Benefit Scheme, and the PSP Retirement Benefit Scheme.
The Insolvency Service's investigation also found the companies made loans to the sponsoring employer, as well as associated companies and individuals, and had failed to adhere to pensions legislation and guidance from The Pensions Regulator.
A petition to wind up the two firms was presented on 16 February, and the companies were then shut down by the High Court on 28 March.
Gleeson Bessent managing director Roger Bessent rebuked many of the Insolvency Service's conclusions, stating members were informed of investment risk in a "detailed risk letter" and a low to medium risk full-managed default fund was available to members.
He added members were also able to cancel their transfer, and for early cases there was no AMC applied and the £1,645 initial fee covered three years of costs. Following this, he said new transfers cost £275 plus VAT, and a 1.5% AMC.
Bessent admitted there had been difficulty obtaining share certificates from one investment, but said this was later resolved, and employer-related investments were within 5%. He also said the firm recognised "shortcomings" for trusteeship and so had sought help from a pension administration expert.
Finally, he argued the court had judged the companies under the 2016 code of conduct, rather than the code that existed in 2013 when the investigation began.
"We co-operated every step of the way and produced reams of information and comprehensive answers to questions," he added. "We are very disappointed at the outcome and we were put in a positon where we couldn't afford to continue defending the case from a financial point of view."
However, Insolvency Service group leader for companies investigations in the north Scott Crighton said the firms had fallen short of regulatory standards when handling members' funds.
"The Insolvency Service will investigate and bring to a halt the activities of companies that fail to meet the required standard for dealing with investment funds placed with them by members of the public and that are found to be operating against the public interest," he said.
"For their own protection, members of the public need to be wary of any uninvited contact offering them a free pension review, and to be aware that many of the products on offer are unregulated and high risk or may even be outright scams and the safest course of action is to simply ignore them."
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