www.pensionless.co.uk

ReportInvestor

dunstonh wrote:

In any story, there are four sides. His, theirs, the truth and how the truth is interpreted.

That's really good, dh. I like it when the inner philospher in you breaks out.

jamesd

dunstonh, I'm puzzled. The gentleman states that "The only letter they received was the one on my website bearing the £3000 pension policy number. It was a signed letter that gave Privilege Connections the right to that policy only and in no way appointed them as having a right to any other policy."

That document doesn't appear to be appointing anyone as a general agent, but rather authorising one specific act, the transfer of one specified policy.

Do I need to be concerned that in giving one trusted financial services company an instruction to transfer one sum, it will take instructions from the recipient to do whatever the recipient wishes as my agent?

How can a consumer protect themselves from recipients doing whatever they wish in such a situation?

How can the industry as a whole reduce the risk using notification or other measures?

Debt_Free_Chick

Unfortunately, I don't think that Malcolm is giving us the whole story.

The Zurich form on the website is simply an instruction to pay the value of the smaller policy to a new pension scheme. It does not appoint anyone to act as his agent.

I strongly suspect that there is a separate letter of appointment, but that this probably confirms what Zurich are saying. That the agent was appointed in respect of all his pension policies. Understandably, Malcolm is not keen to publish that particular letter.

The form on his website is a red-herring as it does not deal with the appointment of an agent.

He has been the victim of his own ignorance. It is also not entirely clear what happened to the money transferred. It went into an occupational pension scheme .... but Malcolm does not state what else happened and doesn't comment on whether Zurich undertook any checks to satisfy themselves that this was a real scheme, or not

dunstonh

dunstonh, I'm puzzled. The gentleman states that "The only letter they received was the one on my website bearing the £3000 pension policy number. It was a signed letter that gave Privilege Connections the right to that policy only and in no way appointed them as having a right to any other policy."

Zurich state that they have a letter of authority appointing Privilege as his agent to act on his behalf. "As you are aware, we received a validated instruction to appoint Privilege Connections as agent for Mr Perkins and then subsequently acted on those instructions. "

The transfer application isnt what they are referring to.

Do I need to be concerned that in giving one trusted financial services company an instruction to transfer one sum, it will take instructions from the recipient to do whatever the recipient wishes as my agent?

No. They will do what the letter says. However, if you appoint an agent to act on your behalf then they can take instructions from that agent to the level that you authorise in that letter. An IFA would normally get you to sign an agency transfer for commission and servicing rights. This would allow valuations, policy information, requesting data such as projections etc. Normally the worst you can do is a fund switch or change of address without a signature. To have an agency arrangement, you have to be FSA authorised and providers will check that before setting one up.

An authority to act on your behalf though is a different beast.

How can a consumer protect themselves from recipients doing whatever they wish in such a situation?

Dont transact with a company that is not FSA authorised and asking for funds to go to themselves. If I turned up on your doorstep and asked you to pay £100k to my company would you do it? From the IFA (or tied adviser) point of view, the vast majority are not authorised to hold client money. So you wouldnt be in this position. The cheques would be payable to Norwich Union or Clerical Medical etc. Same with transfers. They wouldnt be payable to "my own pension scheme to help fund my Spanish retirement".

How can the industry as a whole reduce the risk using notification or other measures?

Well that has just made me think. Zurich would have written to him to say the transfer had left them and how much. There would have been a short period where they could have recalled that payment or cancelled the transaction had he notified them.

Back to how you reduce risk. In this case, had he sought advice, an IFA would have given him a level of consumer protection that he hasnt got because he went DIY.

When you sign a contract, you can either get a solicitor to review the contract and advise or you can do it yourself. If the solicitor fails to make you aware of a potentially negative point then you can claim against the solicitor. If you did it yourself, you only have yourself to blame. The same applies to financial services. If you have an adviser, the adviser takes on the liability for the advice given. If you dont have an adviser, then you take on the responsibility.

This is why when you purchase products through a discount broker they are cheaper. The cost of liability to advisers is significant. If you dont have that liability, you can discount that out straight away.

EdInvestor

Back to how you reduce risk. In this case, had he sought advice, an IFA would have given him a level of consumer protection that he hasnt got because he went DIY.

It's not at all clear that he went DIY - or if he did do that, he knew that was what was happening.He seems to have received some kind of 'advice" - or what he thought was advice - from this firm Privilege, which wasn't apparently a regulated firm.

Does it seem to anyone that this might be a "pension unlocking" case which went even more badly wrong than usual?

cheerfulcat

It was quite clearly a fraud, there seems no question about it. What surprises me is that he says

" Anyway my funds were now in the hands of extremely plausible people, not now living locally but in Spain and they strung me along with talk of various investments. I was powerless to do anything but trust them. "

I don't understand why he didn't go to the police at this point.

dunstonh

It's not at all clear that he went DIY - or if he did do that, he knew that was what was happening.He seems to have received some kind of 'advice" - or what he thought was advice - from this firm Privilege, which wasn't apparently a regulated firm.

So in other words, he didnt seek advice from an FSA authorised financial adviser. What he thought he did doesnt come into it. If you ask a friend down the pub for advice, it doesnt make him an adviser.

We have to assume there was no adviser as everyone else has been listed who was involved. He was obviously naive about these things but if you chose not to use services of those who can protect you from things like this, then you are taking on the risks yourself.

cheerfulcat

He thought he was getting advice - from his site:

" In 1998 my business of 23 years was struggling and I faced possible bankruptcy. I saw an advert in the Grimsby Evening Telegraph, from a fairly local company who claimed they could legally release funds from pension schemes.

I phoned them up and I was visited by the representatives of the company, Privilege Connections.
They showed me an official letter from the Inland Revenue which stated that they were an approved pension company, under the name of the Employment Benefit Plus Pension Scheme. "

Mind you, it strikes me that he knew that there was something dodgy about releasing the pension funds...

EdInvestor

Ah yes, looks like a pension unlocking case.

Usually what happens with these is the money gets transferred to some spurious fake "company pension scheme" set up to receive the money, and the "advisor" pockets a swingeing charge of something like 30% of the fund.

Then the Revenue finds out ( from the transferring provider) and hits the victim with a tax charge on top ( of 35%? Or is there a penalty as well making it 50%?)So the individual ends up with around a third of his pension pot if he's lucky.

There were a lot of warnings about pension unlocking around three or four years ago from the FSA.

There was also pension unlocking misselling by IFAs

As mentioned in the Mail thread he may be able to claim against whoever were the trustees of the original EPP - presumably Zurich.

defender_of_the_weak

I am afraid there is much more to this that Dunbar do not seem to be revealing about the checks they undertook or not before sending £100,000 to an occupational pension scheme and the authority to act on his behalf.

They have failed the most basic due diligence in this regard.

If the agency was not authorised at the time of the transfer then AD had no right to act on any form of instruction without checking regulatory status first. If they thought they were transferring to an occupational scheme then there should have been two separate applications and not having it sent, 'on the nod' of the supposedly appointed agent.