The Pensions Ombudsman (TPO) has reported two trustees of the Black and White Financial Solutions (BWFS) Occupational Pension Scheme to The Pensions Regulator (TPR).

TPO also upheld the complaint against the two trustees of the scheme, Paul Green and Michael Stanley, directing them to pay a total of £24,000 for “exceptional maladministration causing injustice”, with £6,000 awarded to each of the applicants.

In addition to this, the respondents have been ordered to pay back £825,210 to the scheme, plus interest at the rate of 8 per cent per annum.

In the ruling, the applicants, identified by TPO as Ms E, Ms S, Mr N, and Mr T, alleged that they were unable to access their pension fund, that the trustees had failed to administer the scheme, and that they were concerned that their pension fund had been lost or misappropriated as a result.

TPO found that Green and Stanley had transferred £858,679.38 from the scheme’s assets into two investment companies, Loxwood Real Estate Ltd and Prosperity Global Partners Limited, by way of seven loan agreements.

Concerns were raised by the ombudsman about the transfer decisions as TPO stated that neither Prosperity nor Loxwood had any trading history, none of the loan agreements had any form of security against the investment companies, and the investments were unregulated.

The BWFS also received a commission rate of 15 per cent on the over £800,000 loaned, although this was not disclosed to members of the scheme.

This led TPO to describe the investments made by Green and Stanley as most likely being classed as “exceptionally high-risk and hazardous by any other competent financial adviser”.

There were also concerns around the lack of communication from the trustees as, after BWFS was dissolved on 25th July 2017 by Green, many members complained that they were not made aware of the dissolution.

In upholding the complaint, the ombudsman concluded that the trustees had breached their fiduciary duty to manage conflicts of interest and their duty not to profit from their position of trustees.

The ombudsman also stated that, by failing to verify the status of the investments with the investee companies, withholding the fact that BWFS had been dissolved, and disregarding the impact this would have on the scheme and its investments, Stanley and Green had “clearly” acted in breach of their duty to act honestly and in good faith.

The ombudsman further elaborated that the investments made by the trustees were made in breach of their statutory and trust law duties and that the trustees provided false information to members in breach of their fiduciary duties to act honestly and in good faith.

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