The Insolvency Service has banned three payday loan directors for using pension liberation money to pay off the company’s debt.
Speed-e-Loans.com directors Philip Miller, Robert Alan Davies, and Daniel Jonathan Miller have been banned for nine, six and five years respectively.
Their misconduct caused the loss of over £1.2m investors’ money.
In July 2012, the firm’s managing director was suspended. The following month the firm acquired a new director, but stopped lending to new clients.
In order to access new funds, Philip Miller, also major firm’s shareholder, suggested to the board receive funds from a pensions liberation scheme set up by third party brokers.
The board agreed that investors would have a “guaranteed” annual dividend payments of 5 per cent and a return of the whole of their investment in ten years.
In exchange, Speed-e-Loans would receive 54 per cent of the money provided by the public and was contractually obliged to repay 100 per cent plus that annual 5 per cent dividend.
Over £2.6m was invested in the scheme and over £1.2m didn’t go into trading but into Speed-e-Loans’ account to repair the balance sheet.
Speed-e-Loans continued to receive investment through May 2013 despite one of the brokers responsible for the scheme going on trial for fraud.
Following media coverage around such schemes, the following month Speed-e-Loans sought advice and went into administration.
At administration, the company had liabilities of more than £4.3m and total listed assets of £150,269.
Insolvency Service chief investigator Cheryl Lambert says the directors were “recklessly negligent in their desperation to save the company”.
He says: “None of them asked simple, obvious questions when it should have been clear to them the brokers were taking nearly 50 per cent in fees, nor the type of scheme they had become involved with and the individuals who were pushing the scheme.
“Philip Miller, the proposer and principal character, stood to gain financially from the transactions through a commission and so his actions demand the harshest criticism.
“Taking action against the people most responsible is a warning to all directors that such behaviour will attract in a very significant sanction. You cannot hide behind a lack of technical knowledge of specialist schemes – you have to exercise independent and critical thought.”