Manita Khuller represented herself in court yesterday taking on on FNB International, which she claims is responsible for the loss of a £170,000 pension pot.
She is up against lawyers Carey Olsen , originators of the Carey SIPP who are representing FNB International Trustees , a part of South African giant First Rand, which has fingers in a number of British pies, including challenger bank Aldermore, which it bought to get a slice of the £350m of tax-payers money from an RBS sinking fund.
The Trustee Investment was into an offshore bond wrapper offered by Royal Skandia, now part of Old Mutual International, another organisation with a South African heritage and a history of fronting failed investment funds.
Manita Khuller is a single Mum,
She was advised to transfer CETVs from her UK DB Plans when today’s protections weren’t in place (2011) .
Her CETVs were invested into the Plaiderie QROPS advised by Professional Portfolio International in Bangkok, where she was living for a short time.
The destination of her money had provenance, the trustees of Plaiderie are FNB International – part of First Rand .
First Rand is a household name in South Africa, Guernsey a financial services hub governed by the Guernsey Financial Services Commission with strong links to the FCA. If she didn’t have enough protection , the bond wrapper was supplied by Royal Skandia which had been bought by Old Mutual in 2006 (and became fully integrated in 2014).
In short, she was being sold a very superior product that had everything about it to trust.
Except that is, the investments.
Manita is an ordinary investor with a ‘moderate’ appetite for risk. But more than half of her pension money – around £170,000 – was put into LM Managed Performance Fund, run by Australian-based LM Investment Management. This company is now in administration, its licence revoked.
It was a risky fund, unregistered with the Australian regulator and invested in a few residential properties on the Gold Coast.
Some advisers had issued warnings about the health of the fund before it collapsed in 2013, dismantling the finances of 4,500 people with more than £200 million invested.
When this fund collapsed, Manita decided to look into her other holdings.
What followed was the discovery that her pension pot, worth more than £300,000, had been split between three high-risk, unregistered funds designed for sophisticated or professional investors.
A quarter of her money had been invested in the Mansion Student Accommodation fund, where her money remains frozen as the fund is being liquidated.
Speaking to the This is Money Manita commented
‘No one with a moderate or low tolerance to investment risk should have had their money put into such funds.’
Then she found out her adviser, Professional Portfolio International (PPI), was not licensed in Thailand
The human cost of the story is told in an excellent article by Laura Shannon in the Mail on Sunday,
But there is another casualty in this, which is the reputation of pension investment which once again takes a battering. We are left wondering
- How she lost two guaranteed DB pensions with strong employer covenants
- Why PPI continues to operate throughout Asia under MD Eric Jordan
- Why Old Mutual and Skandia have yet again been found wrapping dodgy investments
- How a South African and now UK bank is owning a Guernsey Trust in the first place
- What Geoff Gavey, Alan Glen and co were doing at FNB international to claim “trusteeship”.
On our front door
Guernsey is a front door to Britain, OMI and First Rand are all very much part of the UK financial services ecosystem.
Manita Khuller is left, fighting her case against the one part of the chain of entities that has let her down – FNB International.
But the others cited above have contributed in different ways to her impoverishment. It seems almost impossible that over a sum so small to these financial behemoths as £170,000, the Royal Court of Guernsey will be sitting over what is in effect a test case.
For Manita, the prospect of losing the case means financial penury, but for FNB and others there is the financial backing of the South African financial services industry and indeed rich parents such as Quilter and First Rand.
This money originated in UK DB pension schemes and has only travelled in trust to Guernsey, but it has been lost through what have every semblance to investment scams.
None of the people directly involved in her story have ceased trading and she now faces the full weight of what the Channel Islands can throw at an investor.
Though she is bringing the case, she will no doubt be put in the dock for “not knowing better”. It would be nice to think that people now do know better (though there is little evidence for this).
I think it is a disgrace that Manita Khuller is having to go through this. Even more a disgrace that she’s going through it alone . I hope that some of the people I know, involved in the various organisations listed above, will come to their senses and recognise simple concepts such as “fiduciary duties” and the need to “treat customers fairly”.
Thankfully Manita has well-wishers, among them one who sent me details of her predicament. I wish her well.
I wish her well too. Whether she will win in court or not, morally she is in the right and they ALL appear to be in the wrong. This is potentially legal “layering” and immoral “layering” at the least.
The whole scenario is disgraceful and immoral. Why are FNB trading with unregulated advisers in the first place? In addition, no pensions should be held within investment bonds – they do not offer access to cash without penalties and the charges are prohibitive. The investments into which her CETV was placed are totally unsuitable for a pension portfolio in addition to being without any diversification. FNB should hang their heads in shame and I hope Ms Khuller receives the maximum amount of compensation along with the perpetrators of this case being fined very heavilly.
Though the Mail and the Bailiwick Reported my loss as £170,000; they are not financial journalists or pension actuaries, in reality it was much greater. The Trustee produced Pension Transfer Reports showing returns that were much higher. The loss is in excess of £400,000 given that 8 years have passed.
Half of the pension investments collapsed in Year 2 as 50% was in ONE ‘Ponzi’ scheme – which was explained to me as ‘ safe as bank’ with a 10 year track record of steady returns. Not some get rich quick – but just around 6%
But the Investment adviser was unlicensed !! What was this Guernsey Trustee doing? Grabbing business whichever way they could – of course.
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