Avacade and Alexandra Associates have been ordered to pay back £10,715,000 ($13,773,900, €11,743,700) to customers who were induced to transfer their pensions into Sipps, the UK high court has ruled.
The two illegal introducers engaged in regulated activities, including advising on investments, making unapproved financial promotions through their websites and via phone call, as well as making false or misleading statements, the Financial Conduct Authority (FCA) said.
Avacade and Alexandra Associates had already lost their case in the high court on 30 June 2020, where their activities were deemed unlawful.
But an additional hearing took place on 31 July to determine the sum the two companies needed to pay “in restitution for their roles in the unlawful activity”, the FCA added.
Of the total, £10m will be paid by Avacade and £715,000 by Alexandra Associates.
Additional recoveries
The directors involved were also ordered to refund clients.
Craig Lummis and Lee Lummis will need to fork out £2.5m each, while Raymond Fox will pay back £1.7m.
Additionally, both firms and the three directors have been banned from engaging in regulated activities in the UK without authorisation, from making financial promotion and false or misleading statements about regulated investments, the watchdog added.
Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “The FCA will make wrongdoers financially accountable to consumers whom, as the court recognises in this decision, ‘[…] include elderly and vulnerable citizens who have paid their due share of income tax, made sacrifices, and taken prudential decisions for their future retirement over the course of an honest working life’.“
The regulator will be the one collecting the refunds and distributing them to investors.
The ruling, however, is subject to appeal.
