FCAThe FCA has succeeded in its civil claim against two companies and three of their directors found to be providing unregulated pensions advisory services to consumers.

Last week, Andrew Johnson QC, sitting as a deputy Judge in the High Court, found that Avacade Limited (in liquidation) (“Avacade“) and Alexandra Associates (UK) Limited (“Alexandra Associates“), trading as Avacade Future Investments, and the three directors breached financial market rules, by giving unauthorized and misleading retirement advice to over 2000 consumers.

That advice resulted in customer transferring around £91.8 million from their occupational pensions into self-invested personal pensions (“SIPPs”). Of that sum, approximately £68 million was invested into projects that were manifestly unsuitable and ultimately failed or are in liquidation, resulting in significant investor losses.


During a 2014 investigation into Avacade and Alexandra Associates, the FCA found that the companies were contacting consumers and providing free pension reports and misleading statements that induced consumers to transfer their pension pots into high-risk investments (via the use of SIPPs). Typically, the types of investments products promoted were HotPods (office space available for rent), tree plantations in Costa Rica, Sri Lanka and Malaysia and a fixed rate bond (the Paraiba bond) relating to Brazilian property developments.

Deputy Judge Johnson said that “The consumer was exposed to a funnelling process which, by means of development of a series of themes and through the asking of strategically placed questions, drew him or her into thinking that a SIPP was the best of the available options to take.”

The most popular investment was the Costa Rican tree plantation, in respect of which, customers were promised they could make more than £1 million on upfront investments of £18,000 to £36,000, into fast growing trees in Costa Rica – a return that the FCA stated was simply “implausible“.

Meanwhile, Avacade made commissions from the various investments to the tune of £10.8 million.

The case

The directors argued that they were innocent middlemen who introduced consumers to regulated firms, who were responsible for transferring the pension savings into the various investments. The directors therefore alleged that they were exempt from the financial market rules due to their alleged limited involvement.

However, Deputy Judge Johnson did not indulge those protestations, finding that it was “overwhelmingly clear” that the three directors were knowingly involved in the unlawful actions of their businesses. In particular, the Judge found that the directors had been “stepping over the boundary between information and advice,” the directors having no authority to provide investment advice or to undertake investment activity. The directors had also benefitted from the infringements by the commissions made.

The Court found that Avacade’s and Alexandra Associates’ activities were unlawful as they had engaged in the regulated activities of arranging and advising on investments, made unapproved financial promotions through their websites, promotional material and in telephone calls to consumers and made false or misleading statements.

Mark Stewart, Executive Director of Enforcement and Market Oversight at the FCA, stated that “The actions of those involved put the pension savings of thousands of people at risk“. The FCA has asked the High Court to order Alexandra Associates and the directors to pay restitution for their parts in the unlawful activities, and to ban them from engaging in authorised activities in the UK.

A further hearing is set to take place, concerned with investor losses and whether the directors must pay compensation. However, it is reported that the directors are considering appealing the High Court’s decision, prior to that hearing. The directors’ legal representative commented that Deputy Judge Johnson interpreted the law differently to the Court in the recent Carey Pensions case. The Carey case (which we reported on here), considered the potential liability of an execution-only SIPP provider to an investor whose underlying investment in the SIPP had incurred significant losses.


Pension liberation remains a significant concern and there is mounting pressure for more to be done to protect consumers and to safeguard their hard-earned retirement savings. It nevertheless remains important for consumers to stay vigilant and not be enticed by offers of ‘free pension reviews’ from unregulated firms.

Mark Stewart observed that “Unregulated introducers, like Avacade, often try to skirt regulation by making false claims about the kind of service they provide.” “We urge consumers to avoid unregulated firms offering any kind of free pension review and only deal with firms which appear on the FCA register and who are permitted to provide pension advice.”

The FCA is directing any customers of Avacade or Alexandra Associates who believe they may have lost money and who the FCA has not previously contacted about this matter, to now contact the FCA and provide details.

If the case is appealed, this may result in further clarity for the industry as to the boundaries between the provision of information and advice, and the different liabilities arising