Avacade introducers to pay £10.7m compensation

Source: Money Marketing Michael Klimes 2020-08-11

The High Court has ordered two companies and three individuals to pay nearly £11m in compensation over unauthorised pension services.

The order is the latest development in a case about Avacade Limited, which is in liquidation, and Alexandra Associates (UK) Limited trading as Avacade Future Solutions (AA).

It also concerns their directors, Craig Lummis, Lee Lummis and Raymond Fox.

In a judgment dated 30 June 2020, the court found Avacade’s and AA’s activities were unlawful as they engaged in the regulated activities of arranging and advising on investments.

They also made unapproved financial promotions through their websites, promotional material and in telephone calls to consumers and made false or misleading statements.

Avacade judge recused due to perceived conflict of interest; rules out appeal

In mid-July Judge Adam Johnson QC recused himself from the case due to a perceived conflict of interest and ruled out an appeal.

A further hearing took place on 31 July 2020 to determine the amounts the defendants should pay in restitution for their roles in the case.

That resulted in an order published on 7 August 2020 that the defendants should pay the following sums: £10m (Avacade), £715,000 (AA), £2.5m (Craig Lummis), £2.5m (Lee Lummis) and £1.7m (Raymond Fox).

Also AA, the Lummises and Fox have been banned from engaging in regulated activities without authorisation, making financial promotions and making false or misleading statements about regulated investments.

In a statement, FCA executive director of enforcement and market oversight Mark Steward says: “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 FCA adds subject to any appeals against the judgment, it will take steps to recover monies from the defendants and return them to investors.

Zakery Khub Solicitors who represent Alexandra Associates, Craig Lummis and Lee Lummis made a statement.

In it their lawyer Omid Khub says: “After our successful application for the recusal of the trial Judge on 14 July 2020, the hearing of 31 July 2020 concluded the outstanding matters from the first trial.

“The judge for this hearing rejected the FCA’s primary case for an interim restitution orders (IRO) based on ‘investment losses’ and stated in his judgment:

‘In the circumstances, I decline to make an IRO on the assumed loss basis advanced by FCA as its primary case. I am not in a position to be satisfied as to the likely amount that a court will order on this basis at/after the second trial.’

“Our clients are pleased the court has recognised the need for the second trial.

“While our clients sympathise with any consumer who has suffered a loss, they insist that the second trial is necessary to show that they did not cause the loss alleged by the FCA.

“It is clear to our clients that the FCA regulated IFAs and Sipp administrators have a case to answer.”

Khub adds: “The Financial Services Compensation Scheme has confirmed to us that it has already paid out £39,356,175.91 and £3,227,676.84 for the failures of two IFAs, to whom our clients were an introducer.

“It is noteworthy that FSCS claims are being made, against the FCA regulated IFAs and Sipp administrators, for their conduct and causation of loss, and not our clients.

“Our clients are now focused on the appeal and we can confirm that our clients’ notice of appeal (on at least 28 grounds) has been filed with the Court of Appeal. For the avoidance of doubt the judgment of the 31 July 2020 is also subject to appeal and our clients’ are currently reviewing the judgment.”

United Kingdom

investment

FCA

Avacade introducers to pay £10.7m compensation

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