It’s not often that I read a legal judgement in full but that’s what I’ve just done, to understand how Ms Hughes has successfully won a cased which allows her to send her hard earned pension savings to a fund investing in Cape Verde property.
If you have an hour this morning, you too can read why Mr Justice morning over-turned the Ombudsman’s decision to block the transfer and allowed Donna-Marie her liberation rights. The link to the judgement is here.
But in case you don’t here is my synopsis. The Ombudsman decided that since Ms Hughes had no earnings with the employer running the small occupational scheme used to liberate her money , she had no business transferring to it and that he would deny her “transfer credits”. Mrs Hughes argued that she didn’t have to have such earnings as long as she had earnings elsewhere. By referring to a number of other cases, in particular Pi Consulting (Trustee Services) Ltd v The Pensions Regulator , the Judge reckoned Ms Hughes was right, Royal London were wrong to block her transfer and Ms Hughes is now free to invest her money in her Cape Verde beach-hut (or whatever).
I am seeing the eminent lawyer , honorary actuary and Pension Regulator – Andrew Warwick-Thompson for a drink tonight so I thought for once I should know what I was talking about. Hence my labours.
But as I laboured, my thoughts were not with the court-room but elsewhere, wondering what has happened to the numerous occupational schemes like Ms Hughes’ that I and others have referred to Action Fraud as clearly “up to no good”.
I know the schemes I referred could only do people harm, some were advertising similar offers to the Cape Verde property scheme, some offered guaranteed returns through investment in ambulance chasing, others didn’t tell you what would happen to your money, but justified themselves by being auto-enrolment compliant, only charging the member 0.75% pa for legitimised theft.
I guess the answer is that they don’t have to prove they are up to any good, so long as they have an HMRC number and have the permission of a Ms Hughes to have her money, they can liberate away.
As I read, my thoughts were with the unhappy people who have found that the beach hut in Cape Verde was never built, or washed away with their retirement savings.
People have the right to be swindled and there is nothing that the Regulator can do, we are – after all – a free country.
So the whole apparatus of trustees, ombudsmen and the compliance units of our insurers, SIPP providers and occupational schemes are powerless against the determination of Donna-Marie Hughes to have her £8,000 invested where she likes.
Should we be worried about this? I think I side with Justice Morgan, the law is not here to stop people making reckless investment decisions, it is here to make it hard for those playing fast and loose with pensions to find it difficult but in this game of cat and mouse, the mouse must have the chance to eat the cheese.
I question whether we needed to spend so much legal time (and money) determining that we can’t stop Ms Hughes nor get to those running the scam she is so determined to invest into. Nor indeed can we assume it is a scam. Because to name and shame is simply to put one’s head in the mouth of the courts that adjudge libel and slander. And to suggest that similar cases be named and shamed is “tipping off” the fraudsters and – in the process- offering people investment advice.
It is not Mr Justice Morgan who is wrong, not those who enforce the money laundering rules, nor those who devised the rules on investment advice who are wrong. They are all individually right and – in as much as no part of the chain is wrong- collectively right as well.
I know nothing of Donna-Marie, but I know people who have had their retirements ruined who would swear at me for adopting this attitude. I know the people who stand up for those people and I know that many will read this blog and swear at me.
But the fact remains that we live in the UK under the rule of law and the referee’s decision is final. Cheats can prosper but only with the active complicity of people who sponsor them.
That is why it is our duty to pensions , pensioners and to those who have a pension fund at risk from liberation, to publicise the need to be vigilant and to follow the simple precept that if it looks too good to be true- it probably is.