Dozens of veterans were left out of pocket after being urged to switch safe pensions to riskier funds by a firm owned by Michelle Mone’s husband.
One 54-year-old who fought in Iraq lost £168,000 when he moved money from his final salary Army scheme to Financial Provisions Solutions, which later closed.
But he could only claim back £85,000. FPS is majority owned by Doug Barrowman’s Isle of Man business Knox Ltd. He and Tory peer Mone are under fire over the £200million PPE Medpro scandal.
The Financial Service Compensation Scheme has upheld 43 complaints against FPS, handing out £2.9million in compensation, with £85,000 being the maximum individual payout. And 39 of the 43 victims were ex-services personnel persuaded to transfer money from their “gold standard” Armed Forces Pension Scheme to less secure ones, which carry a risk of lower payouts.
The FSCS said it awarded payouts to FPS clients for “bad or negligent advice” they received. It is not suggested that Barrowman had any direct role in giving the advice by FPS. Nor is it clear which advice given was negligent.
The Gulf War veteran, who also served in Northern Ireland during the Troubles, told how he had a pension worth £310,000 when he was advised by FPS. He said: “During our battalion reunions, there was talk about transferring out of the MoD’s pension as you could get your money at 55 rather than 65.
“It’s attractive as you don’t know what’s going to happen tomorrow. I transferred after I got a message from an introducer.
“I had no idea how much money I’d lost. If I had stayed with my MoD pension after 18 years’ service I would have built up a guaranteed income for life. I was devastated.”
The Manchester-based firm was bought by Barrowman’s Knox Group in 2014. It went into voluntary liquidation in January 2019. FSCS officials said there were “eligible claims against the firm and at least one of those claims is valid” and that “the firm has no means to pay these claims itself”.
A spokesman added: “We have received 49 claims against Financial Provisions Solutions Limited. Six were unsuccessful, 43 were successful, and we’ve paid out £2.9million in total.”
Zoe Pearson of Pension Claim Consulting added: “We have helped dozens of ex-service personnel who have been cheated out of their pensions following advice from Financial Provision Solutions Limited.
"The Armed Forces Pensions Scheme provides a final salary pension, the gold standard in pensions, one which no reputable adviser would as a rule advise to transfer away from. The moment our clients transferred pension, they lost out.”
FPS was run from 2014 by Arthur Lancaster. He said the Army pension “had a number of issues in terms of age of access and spousal benefits” that other pensions could help with.
Lancaster added: “When I was appointed as a director, the company ceased providing that service and a review of all the previous reports was undertaken.”
An investigation has found a series of links between FPS and business people involved in the PPE Medpro scandal.
When it went into liquidation, its owners were listed as two companies based at Knox House in Douglas, Isle of Man, the HQ of Barrowman’s Knox Group. The majority shareholder of FPS, Knox Limited, is entirely owned by Barrowman, according to papers.
The documents were signed for the last three years by Anthony Page, who ran Mone’s brand company MGM Media until 2020. He quit and set up PPE Medpro. FPS clients were told their new investment manager would be Creechurch Capital, also based in Knox House.
Barrowman was a Creechurch director from 2010 to 2016, while Lancaster was on the board from 2012 to 2019. FPS clients’ pensions were invested in a number of funds, including KHG Diversified Income, managed by Creechurch, and The Castel Property Fund, which lists Lancaster as an adviser.
The KHG fund was sold in 2019 and suspended this summer. Ms Pearson said FPS made money by charging a “large fee for providing poor advice, deducted from members’ retirement funds” and Creechurch deducted “ongoing fees for making investment decisions”.
Lancaster said Creechurch Capital earned “industry standard management fees” agreed by the pension trustees, while FPS got a “small fixed fee” for providing suitability reports for clients.
Barrowman and Mone have denied any role in PPE Medpro or that they profited from it. But documents leaked to the Guardian suggest the couple benefited from £65million in profits originating from the company.
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