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Firms shut down following £11.9m pension liberation scam

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Two firms have been wound up by the High Court for their part in an £11.9m pension liberation scam.

Clients were encouraged to use their pension savings to buy shares in Liverpool-base KJK Investment with the promise of 6 per cent returns.

At the same time they were told to take out a loan from Windermere-based G Loans, which the returns from the investment would pay off.

Over two-and-a-half years £11.9m was invested in KJK by 209 clients, which was then used to provide loans through G Loans. Clients were not made aware of the arrangement.

Eventually G Loans could not repay KJK and it in turn could not pay dividends to clients. However the firms’ sales commission totalled over £900,000 and directors were paid £490,000.

The investigation found that KJK was not a commercial lender, despite the firm’s claims.

The court ruled the scheme was lacking in any proper commercial basis and that there was no chance of clients getting their investments back.

Insolvency Service investigation supervisor Colin Cronin says: “Pension liberation is being widely promoted as an easy way of gaining early access to pension savings, particularly given the recent changes in pension legislation. Any schemes offering such benefits should be viewed with caution and independent financial advice should always be sought before entering into such a scheme.

“In this case clients were not told that they were obtaining loans funded directly from their own pension pots. The Insolvency Service will investigate and bring to a halt the activities of companies that mislead clients in this way and that are found to be operating against the public interest.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. At what point do we get told that clients were “advised” to do this with their pensions savings by authorised and regulated advisers and that the FSCS is paying compensation?

    Looking forward to the next FSCS levy!!

  2. Gerard Ledwidge 23rd June 2015 at 4:16 pm

    So have the agents and directors operating this scam been arrested and had any earnings confiscated?

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