Lloyd Pope and Peter Legerton did not ensure investments made through self-invested personal pensions (SIPPs) were appropriate for their clients. More than half of TMI’s clients found themselves invested in overseas property operated by the Harlequin group of companies.
Harlequin, which specialised in off-plan overseas property, is currently under investigation by the Serious Fraud Office (SFO).
Both men were also found guilty of failing to identify and manage conflicts of interest and properly overseeing TMI’s compliance function. Legerton, who managed to evade a fine because of financial hardship, benefited from a poorly managed conflict of interest between TMI and an unregulated introducer which resulted in him receiving commission payments.
During the relevant period Legerton’s total income from TMI was £300,567.
Pope received a fine of £93,800. Legerton would have been fined £84,000.
Harlequin was an unregulated scheme which took deposits from investors to build off-plan properties in the Caribbean. The properties could them be sold at a profit or used to generate an income from the holidaymakers who stayed there.
But, only 300 properties were built out of a scheduled 6,000.
In January, the BBC’s Rip off Britain programme featured victims of the failed Harlequin investment scheme. They talked about how they had lost their retirement funds and had been forced to sell their homes because Harlequin would not return their investment despite its failure to complete the build.
TMI provided advice to customers on transferring their existing pension funds into unregulated investments such as overseas property, green oil, biofuels and farmland through SIPPs. Between 2010 and 2013, 1,661 customers invested £112,420,985 in these investment products, many of which were not typically permitted by their existing pension schemes.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “Pope and Legerton exposed customers to risky investments without considering if these products met their needs. Their actions mean many customers face losing all of their hard earned pension funds and fell woefully short of the standards we expect of senior individuals.”
TMI has ceased trading and is now in liquidation. The Financial Services Compensation Scheme (FSCS) is investigating claims made by TMI’s customers.
At the beginning of March, the FSCS valued Harlequin Property Investment as £0.00 it was revealed by Professional Adviser. Around £400m was invested in the scheme and it is expected that investment advisers will be have to foot the bill to compensate the victims of the scandal.
