Court of Appeal upholds decision against Avacade

The Court of Appeal has upheld a High Court ruling that ordered five parties to pay over £10m in restitution to savers who were induced to transfer pension savings into self-invested personal pensions (Sipp).

In a case brought about by the Financial Conduct Authority (FCA), Avacade Limited, Alexandra Associates trading as Avacade Future Solutions (AA), Craig Lummis, Lee Lummis and Raymond Fox were accused of arranging and promoting investments without FCA authorisation, and making false and misleading statements to investors that induced them to transfer their pensions into Sipps and then into alternative investments.

The High Court found in favour of the FCA, ordering Avacade to pay £10m, AA to pay £715,000, Craig Lummis and Lee Lummis to pay out £2.5m each, and Raymond Fox to pay £1.7m.

AA, Craig Lummis and Lee Lumis appealed against the decision, but this was rejected by the court.

According to the FCA, more than 2,000 consumers transferred around £91.8m from their pensions into Sipps.

Approximately £68m of that amount was invested in products promoted by Avacade and AA and approximately £905,000 was invested into a fixed-rate bond relating to a Brazilian property development.

From these investments, Avacade and AA earned commissions in the region of £10.8m and many of the underlying investments have failed or are in liquidation. 

Commenting on the Court of Appeal’s ruling, FCA executive director of enforcement and market oversight, Mark Steward, 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 FCA stated that the Court of Appeal’s decision opens the way for the order to be enforced by the regulator by taking steps to recover monies from the defendants.

It urged any Avacade and AA customers who may have lost money but not previously contacted the FCA to do so.

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