Alexandra Associates, trading as Avacade Future Solutions, has failed in its bid to overturn a judgement that it must pay restitution to members of the public who were induced to transfer their pensions into Sipps.
Last year, the High Court made an order against Avacade, Alexandra Associates, Craig Lummis, Lee Lummis and Raymond Fox to pay £10.7m ($14.9m, €12.5m).
The appeal, which kicked off in early July, was brought by Alexandra Associates and Craig and Lee Lummis.
Off to the Supreme Court?
Omid Khub of Zakery Khub Solicitors, who is representing Avacade, commented: “The analysis of Adams and Avacade has now resulted in two different decisions by the Court of Appeal.”
He continued: “We are carefully considering the judgment of the Court of Appeal, including the view expressed by Lord Justice Popplewell in relation to those UK consumers who were introduced by Avacade and Alexandra Associates as being co-trustees of their own Sipps.
“Indeed, on 8 July 2021, the Master of the Rolls (Sir Geoffrey Vos), expressed concern that this could be ‘bear trap’. The views of these senior judges, (one of whom sits at the helm of the Civil Justice System in England and Wales) taken together, reiterates our long-held view that the claim by the FCA in fact leads to complex applicability of trust laws which undoubtedly could have significant implications for investors and adds further complexity to an already complex area of law.
“We are now considering turning to the Supreme Court for much needed clarification in this case and in the hope to prevent others from inadvertently falling into an unclear regulatory trap.
“We note that Options Sipp have applied to the Supreme Court for permission to appeal the related judgment of the Court of Appeal in Adams. We will be advising our clients on their rights in relation to the same,” Khub added.
According to a press release from the FCA, the Court of Appeal upheld the initial findings that they had engaged in arranging and promoting investments without regulatory authorisation and made false and misleading statements to investors.
But a spokesperson for Avacade said the firm took issue with the phrasing of the FCA press release, as false and misleading statements were not part of the appeal, nor was the promotion.
“The allowed grounds of appeal related to the construction of Article 33, Article 25(2) and the interim order. The Court of Appeal made no findings of fact that differs from the original judgement as that was not its remit.
“The Court of Appeal ruled on the grounds we had permission to appeal on, which did not cover false/misleading/promotions.
“The original High Court judgment does still stand, but there is nothing in the Court of Appeal judgment that was a finding of fact relating to false/misleading/promotions, because these points were not argued in court before the Court of Appeal. So, to that extent the FCA’s claim in its press release that ‘today’s decision by the Court of Appeal upholds these findings’ is misleading.
“It’s simply not what today’s judgment is about,” the spokesperson added.
More than 2,000 consumers transferred roughly £91.8m, of which approximately £68m was invested in products promoted by Avacade and Alexandra Associations – such as office space available for rent, tree plantations and Brazilian property developments.
From these investments, the two companies earned commission in the region of £10.8m.
Many of the underlying investments have failed or are in liquidation.
Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “The Court of Appeal decision vindicates the original decision and will help vindicate the rights of more than 2,000 investors who have lost pension money through the defendants’ conduct in leading them into these toxic and high-risk investments.”
The decision by the Court of Appeal opens the way for the restitution order to be enforced by the FCA.
This means steps can be taken to recover monies from the defendants so it can be returned to investors.
The FCA recommends that any Avacade or Alexandra Associate customers who believe they may have lost money and have not been previously contacted by the watchdog, should get in touch to provide their details.