The High Court has ruled in favour of the Financial Conduct Authority in a civil action against two firms and their directors.
Avacade, which is in liquidation, and Alexandra Associates, which traded as Avacade Future Solutions, provided pension services to consumers without FCA authorisation.
The directors are named as Craig Lummis, Lee Lummis and Raymond Fox.
The FCA first wrote to Avacade clients in November 2018 to inform them that it was taking legal action against the company.
False and misleading
The UK watchdog alleged that the two companies provided a pension report service and made misleading statements which induced consumers to transfer their retirement pots into self-invested personal pensions (Sipps).
The court found that the firms’ activities were unlawful as they had engaged in regulated activities without authorisation
These included arranging and advising on investments; making unapproved financial promotions through their websites, promotional material and in telephone calls to consumers; and making false or misleading statements.
Avacade entered into creditor’s voluntary liquidation on 6 November 2015.
The FCA is seeking orders from the High Court banning Alexandra Associates, the Lummises and Fox from engaging in unauthorised activities in the UK.
The regulator will also ask the court to determine the sums that Alexandra Associates and the directors should pay by way of restitution.
Lost retirement funds
The pension funds were put into alternative investments; such as office space rentals, tree plantations and Brazilian property developments.
More than 2,000 consumers transferred around £91.8m ($113m, €101m).
Approximately £68m was invested in products promoted by Avacade.
Roughly £902,000 was invested into a product promoted by Alexandra Associates, which was a fixed rate bond relating to a Brazilian property development.
The companies earned commission in the region of £10.8m.
Many of the underlying investments have failed or are in liquidation.
FCA executive director of enforcement and oversight Mark Steward said: “The actions of those involved put the pension savings of thousands of people at risk.
“We will now seek restitution for them.”
He continued: “Unregulated introducers, like Avacade, often try to skirt regulation by making false claims about the kind of service they provide.
“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.”