TTF Blog: 30 November 2020

Victims still wait for disclosure on £33M Ecohouse scheme

Beautiful Brazil - pic by Carlos Perez Couto

by Alex Varley-Winter, TTF’s Head of Media Relations & Investigative Reporting

One of the devastating features of investment scams is that they tend to appeal to their victims’ social conscience.

“They’ll have some renewable energy plant in some third world country that will benefit from your investment,” explained pensions expert Lesley Carline, at a TTF Symposium last week.

Scammers often speak to victims like a friend, in a manner that true professionals cannot emulate. Carline compares their bluster to that of Donald Trump: “When pensions people are talking to members about their retirement options we use very complicated words and we are hamstrung by regulation about what we can and can’t say. If you listen to Donald Trump, he used soundbites, he says what you want to hear, he used short sentences and simple words. You may think the guy’s a plonker but he’s very effective. So is your scammer. They research you, they’re friendly, they’re approachable, it always seems to be quite timely when they contact you.”

“Ecohouse” transparency gap?

As TTF’s head of investigative journalism I took a call last week from an investor who was motivated by this kind of ‘social good’ messaging. He’d put savings into a “social housing scheme supposedly affiliated with the Brazilian Government”. However, the plots of land offered for sale in Brazil, it now appears to him, were registered to a different entity than the one advertised. He had lost all of his investment, as had hundreds of other people.

By the caller’s understanding the investors altogether lost £33M and there had been complaints to regulators about the scheme for months before he had put his money in.

It was called Ecohouse, a scheme that was suspended six years ago, since deemed a fraud by  Brazilian authorities. So far, these authorities appear to be hot on this scheme, while UK authorities lag behind: “the Brazilian Government intervened against the scheme because it was fraud. Our Government, or the Solicitors Regulation Authority, they treated it as if it was a collapsed scheme” he said.

By his account, investors’ hopes had briefly alighted on a dogged and ‘brilliant’ Met Police officer, before being held in suspense. Detective Richard Kirk had travelled around the country, interviewing victims.

In June 2017, Kirk wrote to the victims’ group to explain that he had obtained: “copies of all the receipts that Ecohouse held in respect of their expenditure. These will enable me to give a much more detailed report into where and when your funds were dissipated. They also have bank ledgers that give me more information than I have received previously. These show the destination of some of the funds, especially to overseas accounts. This information will potentially save me months of work waiting for information from abroad.”

Investors understandably hoped they were about to get transparency on where their money had gone — but they are still waiting. Kirk moved to a different police force and the case was transferred to another experienced officer. More than three years on an enduring cloud of mystery is hanging over this case, which has not been resolved during the pandemic. Gallingly, my caller was aware of an attempted suicide among the investors.

The victims of this scam were drawn to something called ‘Ecohouse’ because they had a social conscience, and it has now been more than six years since the scheme was shut down. Will they ever find out where their money went?

New powers to 'refuse dodgy transfers' due in April

It may surprise some people to know that a pension provider currently has no power under law to block a transfer of somebody’s life savings into a scheme that they can see may not be safe.

The industry is clawing back some oversight of this,  according to Margaret Snowdon, chair of the Pension Scams Industry Group (PSIG), who spoke at an event we hosted last week.

“We tried very hard to get a change through the Pension Schemes Bill“, Snowdon explained, “because one of the great ironies is that trustees and providers can look at a proposed transfer and know that it’s very likely to be a scam and can do nothing about it because there’s a very strong legal guard in the statutory right to transfer. People are able to transfer to a scam.

“We argued to give trustees the power to refuse dodgy transfers and we had cross-party agreement to it but for various reasons the amendment was voted down.

“But what we did manage to do, was, we managed to get the Pensions Minister to agree to introduce regulations that would have the same effect. … By April next year we should have a set of red flags that are written in regulation. If they are seen the transfer does not have a statutory right and can be legitimately refused.

“We are working with DWP now to draft what would be those red and what will be amber flags now as well for the less serious problems. It’s a huge step, an absolutely huge step,” she said.

Pete Glancy, of Scottish Widows, called for a futher expansion of the ‘safe environment’ around pensions by using a system similar to that used for Master Trusts. Under his plan a scheme would need a kite mark of trustworthiness before any pension savings could be transferred into it. TTF has produced a white paper outlining how this could work.

Calls for scrutiny on HMRC and Financial Advisers

At our Symposium last week, Snowdon added that PSIG has: “proposed a change to the Finance Act to stop the ludicrous practice of HMRC charging tax penalties on victims. I think it’s one of the worst things … not only do the individual victims have to pay tax but the schemes that took the money in the first place have to pay tax.”

TTF’s founder Andy Agathangelou is also horrified by this practice: “HMRC is profiting from the proceeds of crime”, when they pursue scam victims for tax on pilfered money, he emphasised, pointing out that this behaviour is not remotely in line with HMRC’s charter.

Nigel Mills MP also spoke at the session. He praised the Pension Scams inquiry that Transparency Task Force called for  and submitted evidence to including proposing a joint task force initiative.

Mills commented on the new red and amber flag system that is projected for April. “We can probably all accept that it’s people’s own money, and if they really, really, want to do something they should be allowed to do it … but nobody really really wants to have that money stolen or to be scammed. … We need to make it so that if it is a very dubious place that that money is to be transferred to then that transfer can be refused or slowed down while further work takes place. … One of the tricks the scammers pull is to give a sense of urgency … If we could find a way to put a month’s delay into that process so that somebody has a chance to take proper advice, that might be a real sense of progress.”

Can politicians probe “secret commissions” to IFAs?

Another striking suggestion from last week’s Sympisium came from Peter O’Donnell, who lost his house to an investment scam in the mid-00’s and has since founded a firm that partly specialises in mis-selling and investment scams, called New South Law.

O’Donnell said that financial advisers do not currently need to be transparent if they have been paid a commission to recommend a particular financial product or investment to clients. He said he is working on the fall-out of such a scheme at the moment. It “took in 1.6 billion euros from more than 6000 investors. … I’ve had people who invested between 25,000 and 750,000. The 750,000 person told me ‘my biggest problem is I don’t know how to tell my wife’.  … The driving force for this is secret commissions [to financial advisers who recommended the scheme].

“I would really love for politicians to look into the payment of secret commissions between 20% to 50% …  If someone’s recommending an investment and getting so much money, there really should be a way of identifying and stopping that.”

Press Timeline of relevant articles:

25 Nov 2020FSCS seeks extra £92m in interim levy by Daniela Esnerova for MoneyMarketing

25 Nov 2020  – Trump Administration Targets Banks Divesting From Fossil Fuels In New Anti-Climate Rule by Sharon Kelly for DeSmogBlog

23 Nov 2020Bank of England policymaker warns of ‘pandemic hangovers’, as private sector shrinks – as it happened by Graeme Wearden for the Guardian

16 Nov 2020 – Bank of England ‘failing’ on climate change reform by Philip Aldrick for the Times

16 Nov 2020 – Fed moves closer to joining global peers in climate-change fight by Ann Saphir for Reuters

14 Nov 2020Fraudsters will exploit Covid vaccine to con vulnerable, warns National Crime Agency by Charles Hymas for Telegraph

09 Nov 2020Ombudsman inundated with complaints about loans by Katherine Griffiths for the Times

09 Nov 2020Spike in personal pension cases at ombudsman by Rachel Mortimer for FT Adviser

09 Nov 2020 – Regulator: Climate risk ‘looms even larger’ than pandemic by Avery Ellfeldt for ClimateWire (U.S.)

08 Nov 2020How financial services watchdog has reacted to UK consumer worries in Covid by Hilary Osborne for Guardian

08 Nov 2020Five predictions for banking regulation in a Biden presidency by Jon Hill for Law 360

05 Nov 2020Martin Lewis warns of ‘epidemic of scams’ after ICU nurse loses £8,000 by Scott Edwards for Wales Online

05 Nov 2020FCA bans adviser trio jailed for sex offences by Rachel Mortimer for FT Adviser

03 Nov 2020 – ‘We haven’t received a penny’: Business interruption insurance row intensifies as owners fear payout delays, by Elizabeth Anderson for iNews

03 Nov 2020Aviva’s shares fiasco highlights weakness of the city watchdog by Patrick Hosking for the Times

02 Nov 2020Banks have done little to help the country through the pandemic, so why is the government rewarding them? by Simon Youel for the Independent

29 Oct 2020 – Calls to sack Malta financial regulator CEO by Cristian Angeloni for International Adviser

27 Oct 2020U.S. group urges Biden to use financial regulation to control climate change by Valerie Volcovici for Reuters

27 Oct 2020 ‘Impact startups’ continue to raise funding during the pandemic despite difficulties faced by the wider tech startup sector by Sebastian Klovig Skelton for Computer Weekly

26 Oct 2020 – Why there must be thorough probe of claims made by Bank Signature Forgery Campaign – Greg Wright  for the Yorkshire Post

26 Oct 2020 –  Critics demand action over ‘flawed’ British Banking Resolution Service by James Hurley for the Times

24 Oct 2020Banks look to debt collectors to recover bounce back loans by Nicholas Megaw, Stephen Morris and Daniel Thomas for the FT

23 Oct 2020Bank Signature Forgery (film) by Nicholas Wilson for Corruption UK

22 Oct 2020 – UK fraud agency suffers string of senior departures by Kate Beioley for the FT

22 Oct 2020 HSBC froze £1.5bn of customers’ cash in ‘dormant accounts’ – report by Kalyeena Makortoff & Juliette Garside for the Guardian

22 Oct 2020Work harder to find fraud, watchdog tells auditors by James Hurley for the Times

17 Oct 2020 – MPs pursue claims bank signatures were faked on court papers by Rupert Jones for the Guardian

16 Oct 2020 We need universal digital ad transparency now by Laura Edelson, Erika Franklin Fowler and Jason Chuang for TechCrunch

15 Oct 2020 – Rising COVID-19 Rates Send NatWest Misselling Trial To Video by Bonnie Eslinger for Law 360

15 Oct 2020 – MPs Push Agencies to Act on Forged Signature Claims by Law360

13 Oct 2020 –  Mark Carney says banks should link executive pay to Paris climate goals by Kalyeena Makortoff for the Guardian

12 Oct 2020 ‘It is time to reboot the competition regime for the modern, digital age’ by David Wighton, The Times

12 Oct 2020 Gina Miller blasts FCA complaints scheme changes ‘unfair, immoral and illegal’ by Cristian Angeloni for Portfolio Adviser

12 Oct 2020MPs call for input on Pension Schemes Bill by James Phillips for Professional Pensions

10 Oct 2020 Give pension trustees power to fight scammers, say MPs by Kenza Bryan for the Times

08 Oct 2020  – Freedom to transfer pensions should be stripped where scams are suspected, industry experts urge by Jessica Beard for the Telegraph

08 Oct 2020 – Planned pensions shake-up passes first Commons hurdle by Law 360

08 Oct 2020 – WPC chairman says transfer rules ‘must be changed’ by Amy Austin for FT Adviser

07 Oct 2020 – Tech giants share blame for pension scams, MPs told by Law 360

06 Oct 2020 – FCA opens 85 cases over pension scam concerns by Amy Austin for FT Adviser

03 Oct 2020 – Record number of savers fall victim to investment fraud as scam adverts stay on Google by Andrew Ellson for The Times

02 Oct 2020A New Theory of Soil by Alex Varley-Winter for SustainAct

 
 
 
28 Sep 2020 – PM urged to show leadership in fight against scams by Amy Austin for FT Adviser
 
28 Sep 2020The 100 Whistleblowers who changed Wall Street by Stephen M. Kohn and Mary Jane Wilmoth for National Law Review
 
28 Sep 2020TTF calls for govt leadership on pension scams following meeting with PM by Sophie Smith for Pensions Age
 
 
26 Sep 2020 – £60m revamp for Action Fraud hotline that failed victims by Martin Beckford for The Sunday Times
 
25 Sep 2020 – FCA labels Google’s scam advert efforts ‘deeply frustrating’ by Rachel Mortimer for FT Adviser
 
23 Sep 2020 – Bank Forgery Campaign (video) by Andy Verity for BBC
 
 
20 Sep 2020 – Explore the FinCEN Files Data and Suspicious activity reports, explained by the International Consortium of Investigative Journalists (ICIJ); Fergus Shiel and Ben Hallman
 
21 Sep 2020 Flood of complaints expected over Covid-19 UK business loans, by Kalyeena Makortoff for the Guardian
 
 
 
16 Sep 2020 – Regulators Accused of Ignoring Scam Warnings by Jack Gray for Pensions Age
 
16 Sep 2020Tougher clampdown on pension scams is needed, MPs told by Vicky Shaw for Belfast Telegraph
 
 
11 Sep 2020 – ‘Delay changes to Watchdog Complaints Scheme’ by James Hurley for The Times
 
 
03 Sep 2020Regulators have not yet got to grips with how to close down crooks, warns TTF  by Hope William-Smith for Professional Pensions
 

24 Aug 2020Financial Conduct Authority rushes to minimise compensation for its failings by James Hurley for The Times

04 Aug 2020Have your say: Will the WPC’s inquiry into the impact of pension freedoms be too overshadowed by Covid-19 impacts? by Professional Pensions

03 Aug 2020 – ‘“I’m 39, have lost my job and am in debt – can I unlock my £18k pension?” … DON’T do it!’‘ by Steve Webb for This is Money

01 Aug 2020‘I lost £2.3m after I was conned into transferring my pension’ by Jessica Beard for the Telegraph

31 Jul 2020 ‘Common sense’ prevails as pension freedom withdrawals fall 17% — But drop is expected to be ‘a short-term blip’ by Robbie Lawther for International Adviser

31 Jul 2020HMRC figures show plunging pension freedom withdrawals by Hope William-Smith for Professional Adviser

28 Jul 2020MPs launch inquiry into pension scams  by Tom Kelly for Daily MailUK Pension Scams Under Scrutiny After 2015 Relaxation in Rules by Reuters & MPs launch wide-ranging pension scams probe by Justin Cash for MoneyMarketing

24 Jul 2020 – US business groups seek steps to stamp out online fraud by Leonie Barrie for Just Style

22 Jul 2020Pension scams increase amid lockdown by Sophie Smith for Pensions Age & Missed Opportunity to Use Victims in Scam Work by Amy Austin for FT Adviser

21 Jul 2020  Londongrad Calling: Is Europe’s Laundromat the ‘New Normal’? by Mark Conrad

20 Jul 2020 Campaigners Aim to Create Pension Scam Database by Michael Klimes & Government eyes unauthorised firms by Justin Cash for MoneyMarketing

17 Jul 2020 – Year ‘dominated’ by FCA shortcomings as 205 complaints made,  by Rachel Mortimer for FT Adviser

29 Jun 2020 – MPs Pushed to Launch Pension Scam Inquiry by Amy Austin for FT Adviser & Lawmakers Urged To Open Inquiry Into Pension Scams by Martin Croucher for Law 360

14 May 2020 – Under Rising Pressure on Climate, JP Morgan Rejects Shareholders’ Calls to Disclose Carbon Footprint by Alex Varley-WInter for DeSmog

11 May 2020 – FCA urged to build public trust in independent reviews by Rachel Mortimer for FT Adviser

30 Apr 2020 – FCA was warned three years ago about mini-bond firm Blackmore Bond, which collapsed with £45m of savers’ money by Ben Chapman for the Independent

15 Apr 2020 – Met police lose two thirds of finance officers as fraud soars by Ben Ellery for the Times

25 Mar 2020 – Care Home Wants NatWest Docs in Misselling Fight by Law360

20 Mar 2020 – Connaught review delayed as Covid-19 concerns loom by Rachel Mortimer in FT Adviser

07 Jan 2020It’s time to keep your pensions promise, Boris! The PM pledged to help these victims of a huge scam FOUR years ago – and they’re still waiting by Tom Kelly for the Daily Mail.

29 Dec 2019‘Lambs to the slaughter – tens of thousands of savers have lost up to £10billion in rogue pensions schemes sanctioned by the government… and now the taxman is threatening VICTIMS with fines’, by Tom Kelly for the Daily Mail

15 Aug 2019Victims hit by Connaught’s collapse blast City watchdog for ‘whitewashing’ independent review by Lucy White for Daily Mail

05 Jul 2019 Government-owned bank ‘forging signatures’ in repossession cases by Andy Verity for BBC

18 Jun 2019“I came home to find my house had been stolen!” by Angela Ellis-Jones for the Daily Mail

20 Jun 2019 – FCA orders review of its handling of Connaught collapse by Rachel Mortimer for FT Adviser

29 Mar 2019MPs call for inquiry into alleged forgery of signatures by Andy Verity for BBC

15 Feb 2017 – RBS accused of fraud & forgery by customers and ex-employee by Andrew Hosken for The World Tonight BBC Radio 4

22 Dec 2016Solicitors suspended for roles in collapsed Brazilian investment scheme by Nick Hilborne for Legal Futures

23 Sep 2016Which? makes scams super-complaint by Adam French for Which?