Investment & Retirement Solutions Chartered Financial Planner Paul Corner has moonlighted for many years as an adviser to The Pensions Advisory Service and to The Pensions Ombudsman, helping to unravel and hopefully resolve complex pension disputes.
Paul’s caseload predominantly involves SIPPs (Self Invested Personal Pensions) and SSAS (Small Self Administered Schemes); however, yesterday (24 June 2020), the Pensions Ombudsman issued a determination (a judgement) against parties involved in the Norton Motorcycles pension scheme, which we thought we’d share because
- Everything to do with pensions IS interesting
- Norton was a classic British engineering brand and was very local to many of our clients
- A lot of clients get their kicks wearing leather and racing around on two-wheels (at the same time)
In the determination, Stuart Garner, as trustee of the schemes, and former owner of Norton, was found to have “acted dishonestly and in breach of his duty of no conflict, his duty not to profit, and his duty to act with prudence”.
The complaint against Garner was brought the The Pensions Ombudsman by 30 members of three Norton Motorcycles retirement funds, whose entire funds under the schemes had been invested in preference share capital in Norton Motorcycle Holdings, of which Garner was the sole director and shareholder.
The money had been transferred from the Dominator 2012 Pension Scheme, Donington MC Pension Scheme, and Commando 2012 Pension Scheme.
The complaints argued the investments did not accord with the schemes’ purpose; the trustee had acted under a conflict of interest; the trustee had breached his investment duties and had committed multiple breaches of trust; and, the trustee and scheme administrator, LD Administration, had failed to provide an adequate administration process for any of the schemes.
After an investigation, The Pensions Ombudsman found multiple failures, including: the investments were made in breach of the trustee’s statutory, investment, and trust law duties; the trustee breached duties to have in place adequate controls to manage conflicts of interest and ensure effective administration of the schemes; and the trustee breached his duty to have acquired knowledge and understanding of pension and trust law.
There was also maladministration regarding conflicts of interest, having regard to the schemes’ statements of investment principles, and ensuring the investments were appropriate for members.
Following The Pension Ombudsman’s determination, Stephen Timms MP (@stephenctimms), the Chair of the Work and Pensions Committee, has asked The Pensions Regulator to conduct a further wider investigation to address concerns that some other schemes may have similar arrangements.
We often hear concerns from our clients about the proprietory of pension schemes, we all remember the Maxwell / Mirror Group debacle. Since then pension schemes have been subject to relentless legislation, protection and safequards, however ‘law’ itself will never deter everyone from the tempation of commiting a crime. We hope this article provides reassureance that whilst there will always be people with criminal intent, the safeguards really do work.
Click the button below if you’d like to read The Pension Ombudsman’s full determination.