Anthony Cuming and Kyle Jones pocketed over £600,000 in marketing fees after recommending unsuitable pension transfers into high-risk investments.
Who was Beaufort Securities?
Beaufort Securities was a discretionary fund manager that was closed down by the City watchdog, the Financial Conduct Authority, in March 2018. The US Department of Justice brought criminal charges against Beaufort Securities, following securities fraud and money laundering allegations. Fortunately for Beaufort Securities’ clients, almost all of the money they invested has been returned, with the Financial Services Compensation Scheme (FSCS) covering any shortfall.
The FSCS is a government-backed scheme set up to protect clients of failed UK financial institutions. It is funded entirely from levies paid by the financial industry. When Beaufort Securities was shut down, the FSCS limit was £50,000 per claim (now £85,000). The FSCS began assessing claims against Beaufort Securities in mid-2019.
What were Beaufort Securities SIPPs, and why were they risky?
Beaufort Securities SIPPs were Self-Invested Personal Pensions provided to customers through a partnership between Beaufort and Gaudi Regulated Services Ltd. Beaufort was the discretionary fund manager, and Gaudi was the administrator.
One SIPP, the Absolute Return Medium Risk Discretionary Fund Manager Portfolio, was offered to clients with a ‘balanced’ attitude to risk but invested in illiquid high-risk assets that became worthless. Illiquid assets, such as property development or store pods, are difficult to convert into cash quickly or at a fair market value.
Who were the individuals behind Grosvenor Butterworth?
Grosvenor Butterworth was a Cardiff-based financial services firm. Anthony Cuming was an Investment Adviser and Director, in charge of compliance and money laundering reporting, among other roles. Kyle Jones was a client-facing financial adviser.
How were Messrs Cuming and Kyle involved in the Beauford Securities scandal?
+ −Between 2015 and 2016, Mr Cuming, Mr Jones and a Beaufort Securities discretionary fund manager (Mr Sahota) were part of a scheme that identified companies seeking to raise capital through issuing bonds or shares. Most of these bonds/shares were high-risk and of limited liquidity. In return, the investment companies would make substantial payments through introducer fees, commissions and marketing fees.
The financial advisers involved in the scheme, including Mr Cuming and Mr Jones, were incentivised to persuade more customers to transfer money into the Beaufort SIPP. Pension holders’ funds were placed in Beaufort’s Strategic Income Portfolio, managed by Mr Sahota, and invested in specific investments, regardless of whether they suited the customers’ needs.
The pair received over £610,000 in marketing fees, from around £5.9 million paid to the scheme’s participants. Mr Cuming paid the money into his personal bank account, before sharing it with Mr Jones.
The Financial Conduct Authority (FCA) has now issued bans and steep fines. Mr Cuming was fined almost £1.7 million but the FCA agreed he could pay £2000 to the Financial Services Compensation Scheme, as this was “substantially all of his available assets to meet a penalty or judgement”. Mr Jones was fined over £400,000 and paid only £7,200 to the FSCS. Both men can no longer work in regulated financial services activities.
Pension Mis-Selling Claims against Grosvenor Butterworth and Beaufort Securities
+ −Grosvenor Butterworth went out of business in 2018 after receiving many complaints about pension switching into the Beaufort Securities SIPP. Around £4 million was paid out by the Financial Services Compensation Scheme (FSCS) for claims against Grosvenor Butterworth, a small proportion of the £27 million reported to have been paid out on all Beaufort Securities Ltd claims by February 2022.
TLW Solicitors’ point of view
+ −Sarah Spruce, Legal Director at TLW Solicitors, says:
“We should be able to trust financial advisers and fund managers to act responsibly in a heavily regulated industry with strict rules to follow. However, this case highlights how a small number of individuals put their greed before the needs of their clients, demonstrating a complete lack of integrity and independence.
“While it has taken years for the FCA to bring these men to justice, it should offer some reassurance that their dishonesty has been exposed and they will no longer be able to work in the profession.”
Pension, SIPP and Investment Mis-Selling Claims Specialists – get in touch
+ −With our experience of taking cases to the Financial Ombudsman Service and the Financial Services Compensation Scheme, you can trust us to help you navigate what can be complex and time-consuming claims and appeals processes.
If you, a friend, or a loved one was mis-sold a SIPP or investment and are considering making a claim through the FSCS, please get in touch. Call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete one of the contact forms below.
It is important to get advice as soon as possible, as strict time limits can apply.
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