One of Britain’s largest wealth managers is pocketing fees from victims of multimillion-pound fraud. Quilter International is getting thousands of pounds a year from investors conned by a rogue adviser, Martin Rigney of Topps Rogers Financial Management, based in Sheffield.
Rigney was investigated by the financial regulator and jailed in 2017 for forging client documents. The Financial Conduct Authority said Rigney had not told customers that he was moving their money into high-risk unregulated investments, including Poland Geared Growth, a Polish property fund. These investments have been frozen since 2008, and victims cannot get their money out.
Rigney transferred the money using a Royal Skandia pension service that allowed savers to invest in a wide range of products. Royal Skandia later became Old Mutual International, then part of Quilter Group, one of Britain’s biggest financial advice firms. Quilter’s international arm was bought by the pensions firm Utmost International last month.
There is no suggestion of any wrongdoing by Quilter International, but customers have raised concerns about its failure to detect millions of pounds being transferred from ordinary, regulated investments to high-risk unregulated ones over a short period by a single adviser.
The same questions are being asked of mainstream pension firms that took money from pension mis-selling. Big insurers accepted transfers from savers who moved out of gold-plated defined benefit pensions (also known as final salary pensions) into ordinary stock-market pensions, often at the insistence of rogue financial advisers who took huge fees.
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While many of the advisers have since been struck off, the insurance companies have been allowed to keep the fees they make from the transfers.
Rigney’s victims are still paying hundreds of pounds a year in administration fees to Quilter International. Its new owner, Utmost, which will now benefit, has refused to answer any questions about the victims of these crimes.
If the payments continue, the victims’ holdings may dwindle to nothing as fees eat up what is left in the product. One couple stand to lose about £225,000 that was fraudulently invested by Rigney.
The victims
John White, 75, met Rigney, a regulated financial adviser, in Sheffield in the early 2000s. White let Rigney invest his money in a range of ordinary pension products. Then, in about 2006, Rigney transferred £173,000 from White’s pensions into the Polish fund via Skandia. White knew nothing about it and a court found that Rigney had forged his signature.
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Quilter International paid Rigney a commission of 5 per cent of the money clients invested and then 0.5 per cent a year on top between about 2004 and 2010. Separately, Rigney received commission of about £371,000 from the Polish fund, now administered by JTC Fund Solutions (Guernsey) Ltd.
Two years later White had a letter saying his money had been frozen because of liquidity problems with the fund, which invested in “off-plan” residential property developments in Poland. White was unaware that Rigney was already being investigated by the City regulator for other suspicious transactions involving 94 customers. In 2012 he was struck off by the regulator and fined £117,000, but the full scale of his crimes was only just becoming clear. A police investigation uncovered multiple forgeries of client signatures and Rigney was convicted of 16 counts of forgery in 2017. He was jailed for seven years.
Meanwhile, the money in the Polish fund — at least £2.86 million for 16 victims of forged signatures — was still frozen. Rigney’s company Topps Rogers went bust, which allowed the victims to make a claim for mis-selling to the Financial Services Compensation Scheme (FSCS), the industry-funded safety net for savers. As payouts were capped at £50,000 at the time, many were still significantly out of pocket and unable to get at their money.
Quilter International, now Utmost, continues to take large administration fees from investors to hold the mis-sold fund. The fund also applied management and other fees that totalled £2.87 million last year, according to the latest accounts. It is down more than 61 per cent since it opened in 2006, the latest investor update said.
White’s frozen fund is now worth about £19,000. He pays administration charges of just over £100 every three months. The charge has recently increased.
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In his complaint to Quilter International last year he said: “Bearing in mind the switch of investments has been proved in court to be fraudulent, I would be grateful if you could reverse the switches and put me back in the position I would have been had they not taken place.” Quilter International rejected the complaint.
White, a retired director of a coach company, said he would be happy to refund the money he got from the FSCS if he was refunded by Quilter International for his loss due to fraud.
He said: “Why did nobody at Skandia/ Quilter International notice that huge sums of client funds were being transferred from relatively normal, regulated products to high-risk overseas schemes? It appears they were just happy to receive the money rather than worry too much about their clients.”
Quilter International did agree to refund the children of two of Rigney’s other victims, Margaret and Roland Parkinson. The family got £120,000 last year and agreed to refund the payout they had from the FSCS.
David Pugsley, 81, from Sheffield met Rigney at an investment seminar in 2004. He initially invested about £40,000 in large, well-known managed funds. In 2007 he inherited £100,000 and decided again to invest in similar funds. But in 2008, without his knowledge, Rigney transferred the inherited money to the Polish fund, again having forged documents. Pugsley has complained to Quilter International and asked why he is still paying fees to the company. His complaint has been rejected.
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“It should do the right thing and pay back customers for failing to properly check what its salesman was up to,” he said. “It’s not good enough to shift the blame on to customers, especially as they were victims of fraud.”
Janet Webster, 68, and her husband, Byron, 71, are trying to get back about £352,000 that they claim was fraudulently invested into the Polish fund. Their last statement, dated December 31, 2019, values the investment at about £127,000.
The couple, who live in Stocksbridge, near Sheffield, met Rigney about 30 years ago and knew his family, who lived near by. In 2007 the Websters wanted to help a family member by releasing £80,000 from investments. Rigney suggested that they instead take out an interest-only mortgage for £500,000. After gifting funds to family, Rigney would invest the rest into a fund that would pay enough interest to cover the repayments, while the growth in the fund would pay off the mortgage debt, which was due to be repaid in 2015.
They believed that he would invest their money in low-risk products because that was how their other cash was invested. However, they claim that Rigney forged their signatures to certify that they were high-net-worth individuals, and this enabled him to transfer some of the money to the Polish fund via Skandia. He did not tell the couple that it was an unregulated, high-risk product. “He assured us it was an extremely safe investment and never provided any paperwork relating to it,” Janet said.
It was only after the regulator found Rigney guilty of mis-selling unregulated products that they realised they had been defrauded. They did not join the court case against Rigney because they could not face the trauma of litigation. The couple sold their car, jewellery, furniture and eventually their house to repay their debt and now live in a much smaller home.
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They got £50,000 compensation from the FSCS.
Commission to UK financial advisers has been banned since 2013. Advisers must now agree their fees up-front.
Quilter International has been criticised for its failure to carry out checks on advisers whose clients invested through its pension service. The company has also worked with the advice firm deVere Group, which was paid commission of up to 7 per cent by Quilter International. DeVere has been criticised this month by a group of expat Britons who claim that they were misled by deVere advisers. They claim that the advisers were encouraged to mislead them by high commission payments by pension firms, including Quilter International.
DeVere insists that all payments to advisers are made clear to investors before any money is transferred.
Before Quilter International was taken over by Utmost, it said in a statement: “Each case has been individually assessed and in some cases there was evidence of contributory negligence. We appreciate that these clients trusted Martin Rigney, but Quilter International cannot take responsibility for the adviser’s actions and is also not responsible for third-party fund selection. We would have conducted checks to ensure that Martin Rigby was a regulated adviser.”
Utmost said: “While we are not in a position to comment on individual cases, the provision of good customer outcomes is central to Utmost Group’s strategy and we take our obligations to clients seriously. The group is continuously working to improve customer outcomes, providing value for money as well as full transparency around fees and charging structures. We apply the highest standards to the advisers we work with and work with advisers to ensure that customers’ outcomes are paramount.”
JTC Fund Solutions (Guernsey) Ltd has been approached for comment.
Rigney, who is now out of prison and works for an energy brokering service, was approached for comment.
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