Rogue pension firms shut down: what to do now

Fast Pensions Ltd and five other related finance firms have been shut down by the High Court for misusing millions of pounds of pension savings.

The Insolvency Service found that 520 savers were lured into transferring £21 million to 15 pension schemes where the money was used to pay commissions and fund dodgy loans.

Which? explains how the rogue firms worked and what to do if you think your pension savings could be tied up with the 15 pension schemes that have now been taken over.

How did the firms trick pension savers?

The Insolvency Service found 520 people were encouraged to transfer their pension savings from existing providers into one of 15 schemes between 2012 and 2013 using 'unsavoury tactics' such as cold calling.

Fast Pensions Ltd acted as the sponsoring employer while FP Scheme Trustees Ltd (FPST) was the trustee of all 15 pension schemes.

A proportion of the funds moved across were invested in four related finance companies, including Blu Debt Management, Blu Financial Services, Blu Personal Finance, and Umbrella Loans.

Some savers were persuaded to transfer their pots through cold calls questioning the performance of their pension funds or offering free pension reviews.

Others, who were initially looking for credit, were advised by the connected finance companies that they could get a loan if they transferred their pension savings to one of Fast Pensions' schemes.

Read more:How to spot a pension scam

Why were the firms shut down?

The High Court ruled that advice provided by the firms was inadequate, as the companies misrepresented the schemes on offer.

It said advisors also failed to disclose information about returns and the high risk and illiquid nature of the investments, as well as the benefits members would be entitled to.

Scheme members were also informed that the investments would consist of a wide-ranging portfolio but the funds were actually misused for other purposes.

The court found £4 million was used to pay commissions and the remaining funds were used to make loans to companies connected with Fast Pensions Ltd and FP Scheme Trustees Ltd.

Unfortunately, the full extent of the six firms' dodgy practices cannot be measured, as they failed to keep accounting records and to co-operate fully with the investigation.

Which pension schemes are impacted?

The 15 pension schemes that are impacted by the decision to liquidate the six pension and finance companies are:

• Broughton Retirement Plan
• DM1 Retirement Plan
• Elphinstone Retirement Plan
• EP1 Retirement Plan
• Fleming Retirement Plan
• FP1 Retirement Plan
• FP2 Retirement Plan
• FP3 Retirement Plan
• Galileo Retirement Plan
• Golden Arrow Retirement Plan
• Leafield Retirement Plan

What happens now?

The Pensions Regulator will appoint an independent trustee to take over the 15 pension schemes.

This process is expected to take four to six weeks.

Until then, the Official Receiver in the Public Interest Unit (North) will act as trustee of the pension schemes. During this period this will mean it:

• will take steps to protect the investments and assets in the pension schemes;
• will not make investment decisions;
• is unable to provide updates regarding an individual's pension, or to authorise transfers out of the schemes, or to make any payments out of the schemes, including death benefits;
• is unable to provide advice to pension members regarding their pensions

At this stage, it's unclear whether pension fund members are likely to have their money returned, or how much may have been lost.

Read more:Who do I complain to about my pension scheme?

What to do if you're affected

If you're a member of one of the pension schemes and you want advice about your options you can contact thePensions Advisory Service(TPAS) on 0800 011 3797 or via emailvirtual.appointments@pensionsadvisoryservice.org.uk.

If you decided to invest after consulting a financial adviser, you should complain to the firm, and then the Financial Ombudsman Service.

How can you protect your pension savings?

In order to prevent falling victim to rogue operators, and potentially losing your life savings, you should always seek qualified financial advice before making a major decision relating to your pension savings.

Be suspicious if anyone calls you out of the blue - earlier this year, the government announced plans to introduce a ban on pensions cold calling. No legitimate investment firm or adviser will call you unsolicited with advice relating to your pension funds.

If you do want to release cash from your pension, it's vital that you carefully weigh up your options, and consult a regulated financial adviser. In our guide, we explain how to find a good financial adviser.

You can find out more about how pension funds work - and how to protect yourself if you do want to access your funds - in our guide to pension freedoms.