FCA wins legal battle against unregulated pension introducers Avacade and Alexandra Associates

The two firms provided pension services to consumers without FCA authorisation. The FCA alleged the two companies provided a pension report service and made misleading statements that induced customers to transfer their pensions into self-invested personal pensions (SIPPs) and then to alternative investments such as tree plantations and Brazilian property developments.

On Tuesday (30 June) the High Court found Avacade's and Alexandra Associates' activities were unlawful as they had engaged in regulated activities, made unapproved financial promotions through their websites, promotions material and in telephone calls to consumers, and made false or misleading statements.

More than 2,000 customers transferred around £91.8m from their pensions into SIPPs. Approximately £68m was invested in products promoted by Avacade and around £905,000 was invested into a product promoted by Alexandra Associates. From the investments the two firms earned commissions in the region of £10.8m.

Many of the underlying investments have failed or are in liquidation.

The FCA's case centred on the activities of the firms and their directors Craig Lummis, Lee Lummis and Raymond Fox.

FCA executive director of enforcement and market 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.

"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."

Avacade entered into creditor's voluntary liquidation on 6 November 2015.

The FCA is seeking orders from the High Court banning Alexandra Associates, the Lummis' and Fox from engaging in unauthorised activities in the UK.

The FCA will also be asking the Court to determine the sums that Alexandra Associates and the individuals should be required to pay by way of restitution for their roles in the unlawful activity.

The likes of SIPP providers Liberty SIPP and Guinness Mahon are known to have facilitated investments for investors following an introduction from Avacade.

Guinness Mahon was ultimately sold to Hartley Pensions after it fell into administration, and similarly Liberty SIPP's business assets and customer assets were sold to EBS Pensions - part of Embark Group - in October 2018, while the legal entity entered administration in April. 

Decision to be appealed 

Omid Khub, managing director of solicitor firm Zakery Khub, which represented the Lummis', said the men were disappointed with the decision, but sympathised with those who had lost money. He said the firm was "carefully considering" the grounds for appealing the decision. 

"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 investor's money only after approving the investments, and in some circumstances, only after advising upon those investments," he said.

"Today's judgment therefore is an important judgment for anyone in the financial services sector that relies on introducers. The case is to be tried by way of a two-stage trial and this first trial was concerned with the technical interpretation of the law and the specific financial regulations alleged by the FCA to have been breached by the introducers. 

"The High Court in the first trial has adopted a different interpretation to the law to that of the High Court decision in Adams vs Carey Pensions case a decision which was handed down on 18 May 2020. This brings into focus once again the potential for misinterpretation and misapplication of the law."

He continued: "Given the approach adopted in the Carey Pensions decision we are carefully considering the grounds for appeal in this decision.

"Our clients intend to appeal the first Judgment in this case, before the second trial begins, to clarify the legal position by a senior court once and for all."

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