Manita Khuller wins in Guernsey; justice is done but questions remain.

Manita Khuller outside the Guernsey courthouse

Manita Khuller won her appeal against Guernsey-based trustee FNB International. 

In November of last year I published details of the scam she suffered and her court claim for restitution (which she lost). Shortly after I published an open letter from barrister Niall Coburn

Dear Bailiff Collas,

I write to you as former Head of Enforcement and regulator and lawyer who has worked internationally and attended the Trial of Manita Khuller vs FNB Trustees on the 18-21st of November.

As a Barrister of 30 years, I am totally ashamed at this unfair judgment which not only misrepresents the facts as disclosed in court  but actually failed to provide an analysis of the case competently as presented; where ample evidence was provided of FNB’s gross negligence . 

The court completely failed to identify that FNB appointed and retained an unlicensed and unqualified adviser (PPI Advisory) without the most basic of checks such as licensing and regulation.

This is despite the evidence presented in the form of letters, investor alerts and emails from the Thai Securities and Exchange Commission. 

FNB Trustees failed to respect Ms Khuller’s  investment risk profile and with a “quick glance” doomed her pension savings to known failures of a major fund such as LMMPF.

It was clearly shown during trial that the LMMPF was not only unregulated but also “unregistered” and this was in the Fund prospectus that FNB had from the outset. It‘s was not a case of “hindsight” at all.

Matching fund risks to those of the investor investment profile is the most basic of due diligence that FNB did not do, and this is gross negligence that was causative of the loss. These were not funds meant for retail investors, which Ms Khuller is.

The causation is clear from then onwards. 

The evidence displayed is  that FNB was grossly negligent as a regulated trustee and fiduciary and that you very well know but you chose to “protect your turf”.

This is a totally incompetent decision of the highest order and I know that you will all not sleep well in its delivery.

Clearly, you put the implications for Guernsey before Ms Khuller, who was wronged by FNB. 

There is no justice in Guernsey, but men protecting secrets. 

Manita Khuller sued FNB last year after she lost £330,000  from her pension pots.

Khuller claimed she was “mis-advised” by an unregulated adviser while she was living in Thailand, resulting in transferring her two UK defined benefit (DB) pensions into a QROPS. 

The money was put into a Royal Skandia wrapper and invested in three funds, one of which was a property fund run by LM Investment Management, which turned out to be a Ponzi scheme. 

The case was first dismissed by the court in Guernsey, prompting Khuller to seek an appeal. 

The appeal 

Manita Khuller failed to prove that FNB’s reliance on the investment adviser it appointed, showed gross negligence. 

The case is reported on the website of Guernsey Fiduciary – Concept. I have it from Manita that Roger Berry’s  reporting is accurate

“In the appeal, the appointment of the adviser was seen to be reasonable, as certain checks had been made by the trustees, and thus the original decision was undisturbed. 

But the decision concerning breach of duties, regarding the choice of investments, was overturned as it was concluded that a mistake had been made in the original decision, as to the position to which the adviser was appointed.  The appointment was as an adviser not as an investment manager, and a clear delegation of the trustee’s responsibilities was not achieved.

In reality, the adviser made direct instructions to the bond holder without prior knowledge of the trustees, who saw themselves unable to choose investments as they were not investment professionals.  The appeal court concluded the trustees had acted with indifference to its duty and the identified risks, which qualifies as being grossly negligent.

It remains mysterious what checks had been done on the adviser.

Justice is done…

Manita Khuller is  finally seeing justice done , seven years after the LM Fund failed and she started  her complaint against FNB International Trustees, Guernsey. 

She may finally see some restoration of her lost UK DB pension, which was transferred to a Guernsey Qrops in 2011. The quantum of damages has yet to be determined

but questions remain.

Berry concludes

This case demonstrates that whilst some offshore advisers may have acted poorly for their clients, the deeper pockets of the trustees may be accessible to claims if the trustees have not properly delegated their responsibilities or used reserved powers trusts.

The Guernsey Court found against a firm of trustees that has First Rand , a major South African Bank behind them. The Trustees actually held an offshore investment bond which wrapped the failed fund.

But there is another organization with deep pockets involved here, an organisation regulated in another offshore jurisdiction , this time the Isle of Man. Manita Khuller found her DB transfer values invested with an insurance company in the Isle of Man called Royal Skandia.

Questions have to be asked about what was Royal Skandia’s role in this case. If the Trustees were negligent in accepting instructions from a rogue adviser, what about Royal Skandia?

Royal Skandia has since been rebranded Old Mutual International and finally Quilter International but all were or are part of what is now called Quilter. Quilter advertise their ethos here

Shared Prosperity through Responsible Business” is the message to the customer.

Quilter market in the UK through Old Mutual Wealth and  Old Mutual Wealth  continue to market offshore bonds through what is now Quilter International

We must hope that the quality of investments allowed within these bonds is subject to more scrutiny than was the case with Manita Khuller.

We must hope that Quilter International today are more selective about the advisers using their products.

Lessons learned?

Manita Khuller was primarily let down by her adviser, but questions remain not just of the Trustees, but of why she had to spend 7 years fighting this case- winning it only on appeal. Niall Coburn’s letter has even greater force today.

Finally questions need to be asked of Quilter International and their owners.  Consumers purchasing bonds from a life insurance company are likely to consider the term “bond” implies some form of protection, but this bond seems to have provided Manita Khuller with no protection whatsoever, indeed it seems to have obscured the underlying investment.

When selling  a wrapper, it pays to look at what’s inside. The case suggests , for all the organisations supposed to be protecting the customer, no one looked inside.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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8 Responses to Manita Khuller wins in Guernsey; justice is done but questions remain.

  1. Christopher Lean says:

    Unfortunately, the sale of offshore insurance bonds within a pension is rife in the offshore advice industry. The supposed protection does not cover the investments, but it is often sold as such.
    Also, the sale of these bonds is accompanied by some spurious comments about tax efficiency, when the pension itself is the tax wrapper.
    There was no actual need at all for the insurance bond in this case, however the 7% upfront and undisclosed extra commission may have been the reason for the sale.
    If offshore insurance companies removed commission then a lot of the misselling would cease.

  2. henry tapper says:

    Thank you Christopher. Do you consider that the use of these tax wrappers is aiding and abetting bad practice?

    • Christopher Lean says:

      I have no doubt at all.

      • ericinbangkok says:

        Sole reason for the tax wrapper is to hide commission, fees, fund switch costs and allowing the ‘financial advisor’ to act as investment manager. In the jurisdiction in question, a financial advisor may not need to be licensed, but you will find a fund manager (i.e. buying, selling and recommending funds) does.

  3. Stephen Sefton says:

    It’s a great decision and all’s well that ends well. Manita’s nightmare can finally come to an end.

    However, I really didn’t understand the paragraph “In the appeal, the appointment of the adviser was seen to be reasonable, as certain checks had been made by the trustees, and thus the original decision was undisturbed.” That really surprises me!

    I happen to be very familiar with the details of the case. I have been there for Manita since early 2018 – day in day out. I know the details like the back of my hand.

    How the judges concluded “the appointment of the adviser was seen to be reasonable…” is just beyond me? I am somewhat disappointed by that but it is lucky there was some room for the appeal judges to find fault elsewhere with the appointment and so uphold the gross negligence charge. In my opinion there are many QROPs in many jurisdictions that have done exactly the same thing in the last decade. Mine did – appointed an unqualified, unregulated adviser in exactly the same capacity.

    Manita’s advisory firm were completely unqualified for giving pension and investment advice and there was evidence (which the defence vigorously objected to) the firm was not regulated in their respective jurisdiction for giving investment advice but FNB didn’t bother to check or ask the firm for evidence of a licence. So whilst “certain checks” had been done, they didn’t include checking the adviser was qualified for the job or regulated to provide the advice! It was in essence an “old boys network” appointment when you read the affidavits presented by the defence.

    Will QROPs be worried by this verdict. Not in my opinion. Why?

    Because there are not many people with the strength of character and sheer determination to take on such a battle single handed. Manita was seriously bullied and intimidated by the other side’s legal team – and still is as it happens, until the quantum of damages is settled – for years. It’s not over until the fat lady sings said Manita to me a couple of weks ago.

    This shouldn’t be how justice is achieved for victims of pension scams that have been the plague of the last decade. Tolerance to such intimidation is beyond the capacity of most people.

    There is currently a parliamentary enquiry in progress on pension scams which met to get oral evidence a couple of weeks ago. There is an interesting body of written evidence published on the government website – one from Quilter (mentioned in the above article) – bit of a cheek of them in my opinion!

  4. henry tapper says:

    Thank you Stephen. In addition to the WPSC’s inquiry , there is an all parliamentary group that has been set up with the help of the Transparency Task Force to look into scams. I hope that both inquiries look long and hard at the role of the financial services industry who seem to be complicit at times with some pretty vile practice

    • Brian Clarke says:

      Complicit at times with vile practices? My wifes experience with Guernsey trustees and the Guernsey court would say thats a gross understatement. Our case is still going and disclosures and arguments in court have revealed not only many anomolies but also the depths some trustees will go. Yes its an insurance bond within a pension. I think it makes Manitas case look mild. And the fund manager. No client loyalty there either.
      That said, congratulations Manita. Good for you standing your ground.

      • Brian Clarke says:

        Further to my previous comment, after a second hearing, this article hits home more than ever. The bias shown in civil court is astounding. Bailiff directing discussion away from vital issues and almost anything negative towards Guernsey trustees. 5 years after the client passed away, trustees still have his money. A large amount. There are lots of questions to be answered but it seems they are avoiding them from the top down.

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