The Pensions Regulator has stepped in to protect £5.8m of pension savings transferred into a scheme with risky investments which pays unregulated introducers up to 30 per cent commission.
Independent trustee firm Dalriada has been appointed to the London Quantum Retirement Benefit Scheme after TPR raised serious concerns.
It warned members’ funds were placed in risky, illiquid investments including car park spaces, Brazilian farm land and Cape Verde hotel rooms.
TPR found members were unaware of the high levels of risk and were not given appropriate documentation.
In addition, introducers – including cold callers – were being paid commission up to 30 per cent.
Dorrixo Alliance, the firm behind the scheme under the directorship of Stephen Alexander Ward and Anthony Salih, has been removed as trustee of the scheme.
Dorrixo took over the trusteeship in April 2014.
Since then member numbers rocketed from three to over 90. The firm was paid fees totalling £63,000 over six months despite the TPR saying there was “no evidence of what Dorrixo was paid for doing”.
There was a pipeline of around 600 potential new members on the verge of joining the scheme.
TPR director of case management Nicola Parish says: “The concerns we received about the scheme highlighted worrying factors regarding its governance.
“This case should act as a reminder to all savers, pension scheme trustees and administrators to remain alert to the dangers of transferring pension savings in order to access unrealistically high returns often associated with exotic sounding investment opportunities.”