TMI was the main distributor of the Harlequin Property Fund which is currently under investigation by the Serious Fraud Office.
The FCA said Lloyd Pope and Peter Legerton have been banned from holding senior positions in the financial services industry. Pope was also fined £93,000 and Legerton would have been fined £84,000 but for his financial hardship.
“As directors with responsibility for the management and oversight of TMI, Pope and Legerton should have ensured that TMI considered the suitability of investment products for customers but failed to do so,” the FCA said in a statement.
Georgina Philippou, acting director of enforcement and market oversight said: “Their actions mean many customers face losing all of their hard earned pension funds and fell woefully short of the standards we expect of senior individuals.”
The Financial Services Compensation Scheme (FSCS), a compensation fund for customers of authorised UK financial services, is investigating claims made by TMI’s customers with the costs set to add to the burden being borne by the whole industry from a growing number of complaints.
Earlier this week the FSCS announced an interim £20m levy on life and pensions intermediaries to help fund the compensation pay outs. It said many of the claims have arisen from a retail investor’s SIPP fund being invested into non-standard asset classes which have subsequently become illiquid, such as offshore property schemes.
It also identified claims relating to advice by financial advisers to transfer funds from existing pension schemes into SIPPs as another major cause.
The problems at TMI and the Harlequin property fund were first identified in January of 2013 when the FCA issued an alert on the Essex-based luxury property developer. On 1 March of that year it contacted SIPP providers, asking them to say whether they had any clients invested in Harlequin, which it said was not FSA regulated. By April Harlequin Management Services, the owner of the beleaguered Harlequin Property Fund, had filed for administration.
The FCA said the problems at TMI were not limited to its advice to customers on investing in Harlequin as it provided advice on transferring client’s existing pension funds into other unregulated investments such as green oil, biofuels, and farmland via their SIPPs.
Between 2010 and 2013, 1,661 (TMI) customers invested £112,420,985 in these investment products and the overseas property scheme, “many of which were not typically permitted by their existing pension schemes,” it said. During this period Legerton’s total income from TMI was £300,567.