During its investigation, TPR found that approximately £5.8m ($7.7m, €6.9m) of new members’ accrued pension savings were put at risk after being transferred into the London Quantum Scheme between August 2014 and May 2015.
Funds were invested in Brazilian farm land, car parking spaces in Glasgow and Dubai, Cape Verde hotel rooms, and in corporate bonds and loans.
TPR found that, as trustee, Dorrixo Alliance had a serious disregard to the obvious risks that members might be misled about the true nature of the investments held by the scheme and the risks that came with those investments.
As a result, Dorrixo was removed as trustee and replaced by Dalriada Trustees.
TPR’s concerns included:
- Risky and illiquid investments – the investments exhibited inappropriately high levels of risk which members were not made aware of.
- Lack of documentation – TPR investigations revealed significant gaps in the expected documentation. Whether or not documentation actually existed in relation to some of the scheme’s investments was doubtful and called into question their legitimacy.
- Introducer fees – The scheme was promoted to potential new members by introducers, including cold callers, who were paid by commission (sometimes up to 30%) in breach of trust.
- Advisers – No auditor was appointed to the scheme and Dorrixo failed to take proper advice on the investments.
Nicola Parish, director of case management at TPR, said: "The concerns we received about the scheme highlighted worrying factors regarding its governance.
"This case should act as a reminder to all savers, pension scheme trustees and administrators to remain alert to the dangers of transferring pension savings in order to access unrealistically high returns often associated with exotic sounding investment opportunities."