For members of certain pension schemes used for “Pension Reciprocation”

THIS IS VERSION 14 OF THIS DOCUMENT – ISSUED THURSDAY 13th NOVEMBER 2014 AT 1500 BY DALRIADA TRUSTEES LIMITED. FREQUENTLY ASKED QUESTIONS WILL BE ADDED HERE FROM TIME TO TIME AS THEY ARE IDENTIFIED – PLEASE CHECK BACK FOR UPDATES.  THIS DOCUMENT MAY BE FREELY CIRCULATED OR REPRODUCED IN ITS ENTIRETY BUT DALRIADA TRUSTEES LIMITED MUST BE ACKNOWLEDGED AS THE SOURCE OF THIS DOCUMENT.  WE WOULD APPRECIATE THAT WHEN CIRCULATING ELECTRONICALLY OR OTHERWISE THAT A LINK TO www.dalriadatrustees.co.uk/ark IS SHOWN SO THAT READERS CAN EASILY ACCESS THE LATEST VERSION.

This Frequently Asked Questions (FAQ) document relates to the following pension schemes:

Dalriada has made documents available for download by members relevant to their Scheme. Currently these include the Scheme’s Internal Dispute Resolution Procedure and Trust Deed and Rules together with the Annual Report & Accounts. You can access the list of documents available for download by clicking on the Scheme name link below.

Cranborne Star Pension Scheme
Grosvenor Parade Pension Scheme
Tallton Place Pension Scheme
The Lancaster Pension Scheme
The Portman Pension Scheme
Woodcroft House Pension Scheme

A further Announcement has been issued to members on 10th November 2014. Copies of all Announcements issued to date can be downloaded from the links below:

Announcement 1 – 10th June 2011
Announcement 2 – 14th June 2011
Announcement 3 – 2nd August 2011
Announcement 4 – 6th October 2011
Announcement 5 – 28th November 2011
Announcement 6 – 16th December 2011
Announcement 7 – 13th January 2012
Announcement 8 – 8th November 2012
Announcement 9 – 28th January 2013
Announcement 10 – 15th February 2013
Announcement 11 – 16th April 2014
Announcement 12 – 23rd July 2014
Announcement 13 – 28th August 2014
Announcement 14 – 10th November 2014
Announcement 15 – 7th April 2016
Appendix to Announcement 15 (HMRC Note to Members) – 7th April 2016
Announcement 16 – 6th October 2016
Announcement 17 – 16th June 2017

Announcement 18 – 22nd June 2017

Announcement 19 – 24th August 2017

Details of Claim
Order dated 1 December 2016
Table of Issues
First Witness Statement of Ben Fairhead
22062017 Court Order
20062017 High Court – Open Transcript

On 31 May 2011 Dalriada Trustees Limited (“Dalriada”) was appointed as an Independent Trustee of the schemes listed above.

The schemes have been used for what the promoters refer to as “pension reciprocation.”  As a result a significant proportion of the assets of the schemes are represented by what the promoters call “Maximising Pension Value Arrangements” or MPVAs under which a member of one of the schemes receives a payment from another of the schemes subject to terms set out in the MPVA.

Since Dalriada’s appointment it has been reviewing the underlying scheme documentation, and it has taken legal advice on various issues including, in particular, the legal status of the MPVAs that have been entered into.

Dalriada has been advised by a leading barrister (a Queen’s Counsel or “QC” who specialises in pensions and trust law matters) that there is a strong possibility that the MPVA arrangements are “void”.

In this context “void” is a technical legal term and if it is decided that the MPVAs are void they would not be recognised in law as ever having taken effect.

As a trustee Dalriada must understand how these arrangements should be operated going forward and Dalriada has been strongly advised that it must clarify the legal status of the MPVAs by applying to the High Court for direction.  This would mean that a High Court Judge would decide the legal status of the MPVAs.

Dalriada Trustees Limited (“Dalriada”) has issued proceedings in the High Court to clarify the status of the MPVAs that many members of the Schemes have entered into. Mr David Faulds has kindly agreed to represent the interests of members in the Court proceedings. He is referred to as a Representative Beneficiary. Mr Faulds has obtained legal representation through solicitors, Gateley, who in turn have instructed a barrister. All Mr Faulds’ reasonable costs (which will include the cost of the solicitors and barrister) will have to be met from the assets of the Schemes.

Dalriada is also engaged in clarifying the nature of certain other investments made by the schemes.

At this time it is appreciated that members and prospective members of the schemes will be concerned about the security of their pension and any implications that may affect them personally if they have entered into an MPVA with trustees of another scheme.

Dalriada’s lawyers have successfully applied for the Court proceedings that will determine the legal status of the MPVAs to be expedited. This means that the trial, at which the initial key questions will be considered by the Court, will take place significantly earlier, perhaps a full year earlier, than it would do if it were simply scheduled by the Court in the same way as any normal case. The hearing will take place at the end of November or in early December 2011. The Court has made it clear that, despite Dalriada’s efforts, November 2011 really is the earliest point at which a hearing could take place.

On Friday 25th November we received confirmation that  Court proceedings would commence on Tuesday 29 November 2011. The proceedings were heard by The Hon. Mr Justice Bean and took place in the Royal Courts of Justice, Strand, London WC2A 2LL.

The court proceedings concluded on Friday 2nd December.

On Friday 16th December 2011 the judgment was handed down. A full copy of the judgment transcript can be downloaded by clicking on the link below:

16th December – Final form judgment

An Announcement to members has also been issued on 16th December 2011. This, too, can be downloaded from the Announcements links.

In summary, Mr Justice Bean found the MPVA loans to be ‘unauthorised payments’ under the Finance Act 2004, outside of the scope of the trustees’ powers of investment and a ‘fraud on the power’ of investment. As such, MPVA loans were not validly made.

There are further questions to consider and it is hoped that these will be put to the Court early in 2012.

On 11th January 2012, Dalriada received copies of Notices of Appeal, lodged by Athena and Minerva. The Court has indicated to our legal advisers that it will aim to make its first decision in the window 1st to 22nd March 2012. At that point, the Court could allow Athena and Minerva permission to appeal, or it could refuse permission or, alternatively, require a hearing to determine whether or not to allow permission.

If permission to appeal is allowed, a hearing of the appeal will follow.

Dalriada will now consider its options in light of this decision by Athena and Minerva.

Update 6th April 2012

In our Announcement dated 13th January we advised that we had received copies of Notices of Appeal, lodged by Athena and Minerva and that the Court has indicated to our legal advisers that it would aim to make its first decision in the window 1st to 22nd March 2012.

Further that, at that point, the Court could allow Athena and Minerva permission to appeal, or it could refuse permission or, alternatively, require a hearing to determine whether or not to allow permission. If permission to appeal was allowed, a hearing of the appeal would follow.

At that point we had not seen the legal arguments put forward by Athena and Minerva in support of their decision to appeal.

To date, we have still not had sight of any supporting documents lodged with the Court by Athena and Minerva. The latest information we have from our legal advisers is that Athena and Minerva have sought, and been granted, several extensions to supply these documents.

As such, unfortunately, we are unable to say any more at this stage than was said in the 13th January Announcement.

Update 10th November 2012

Towards the end of August, our legal advisers received notice from the Court of Appeal that Lady Justice Arden has ordered an oral hearing to determine the application for permission to appeal. The hearing would take place on 24th October 2012.

David Faulds’ representatives had also been invited to attend.

In advance of the hearing, Dalriada’s legal advisers submitted its own arguments regarding the application for permission to appeal, a key issue being that Athena and Minerva had no legal standing to make the application for permission to appeal. Mr Faulds’ legal advisers also submitted arguments.

Subsequent to that and, indeed, only very shortly before the hearing on 24th October, Athena and Minerva’s legal advisers submitted an application to Court to be granted permission to represent the members for the purposes of the appeal or, otherwise, for a further Representative Beneficiary to be added to the proceedings.

At the oral hearing on 24th October, it was established that Athena and Minerva did not have the necessary standing to make the application for permission to appeal. As such, it was ordered that the application for permission to appeal be adjourned, subject to an application being made by Athena and Minerva to Court to have a further Representative Beneficiary added to the proceedings, this application to be made within 14 days. Athena and Minerva were ordered to pay the costs incurred by both Dalriada and Mr Faulds’ representatives as a result of what proved to be an unnecessary hearing.

In the event that this application is not successful, or the appeal is not going to proceed for any reason, Athena and Minerva have provided an undertaking that they will take reasonable steps to have the appeal dismissed.

Dalriada will look to update members in due course. However, it is unlikely that, even with the application to have a new Representative Beneficiary added being made within 14 days, this will be heard by the Court before the New Year.

Update 28th January 2013

The application was lodged with the Court within the required 14 days (on 6th November 2012) with a hearing originally listed for 30th November 2012.

However it was not served on Dalriada’s legal advisers until the 22nd November 2012 which was inadequate notice of the hearing. Further, the estimated time for the hearing was considered too short. As such, the judge, Mr Justice Bean, adjourned the hearing to be re-listed on a date when the parties would have proper notice and an appropriate amount of time to consider the issues. The hearing will now take place on 1st February 2013, in front of Mr Justice Bean.

In Dalriada’s announcement of October 2011, it gave members information regarding an investment made by the original trustees to purchase a company and investment plot in Cyprus, following which £4m was paid to a Cypriot company with a view to securing an option to buy the shares in the company that owns the plot of land near Larnaca. At the time of Dalriada’s appointment, the company concerned was seeking a further £2.6m in order to complete the purchase. Dalriada, as members may recall, expressed reservations about the project, given the state of the property market in Cyprus.

Dalriada is pleased to report that it has reached an agreement with the Cypriot company that will result very shortly in the sum of £4m, together with interest of £325,000, being returned to the accounts of the Schemes.

Update 17th February 2013

The hearing to hear Ms Deborah Oades’ application to be joined to the proceedings as a further representative beneficiary, effectively in place of Mr Faulds, and, additionally, to have her costs met from the Schemes, took place on 1st February 2013.

Ms Oades was not successful in her application to obtain an order entitling her to act as a representative beneficiary and her request for payment of costs from the Schemes was also declined.

Athena and Minerva were ordered to pay the costs incurred by Dalriada and Mr Faulds in relation to the application.

We are currently awaiting a decision from Ms Oades as to whether she intends to appeal this decision (from Friday 1st February) and, more generally, to clarify whether this means that the application for permission to appeal the decision reached in December 2011 will now be dismissed or potentially still pursued.

Dalriada remains unable to progress matters materially until the position with regard to the appeal is known. However, we have set out in our 10th Announcement a flowchart as to how things might progress.

This Announcement also gives an update on costs incurred since the date of the last Accounts.

Update 17th April 2014

Dalriada has now finally had confirmation, ultimately, from the Court that the application for permission to appeal has been dismissed.

Dalriada now requires directions from the Court, the first (a Beddoe application) will seek directions as to what approach to take with regard to seeking recovery of the MPVA loans. The second will seek directions as to the extent to which there is any basis for segregation of individual member funds and, thereafter, regarding the division of costs and investment losses between schemes and between different categories of members.

Dalriada will endeavour to ensure that both elements are addressed by the Court at the same time. Whilst we will look to have the Court hearing as soon as possible, it may still be some months away.

HMRC – Dalriada has been in discussion with HMRC and communication is ongoing. HMRC has set out its position that it does intend to levy unauthorised payment charges on members. Further, HMRC intend to determine the unauthorised payment charges payable with reference to the loans made by the scheme of which an individual was a member. Whilst we are not clear at this stage how individual tax assessments will be calculated, it does mean that those members who did not receive an MPVA payment might face a tax charge.

This approach taken by HMRC may impact on other tax charges that might be levied against the Schemes (Scheme Sanction Charges) and, as such, Dalriada is keen to maintain dialogue with HMRC.

In light of possible tax charges, Dalriada wishes to protect the Schemes from further investment losses and, as such, continues to adopt a very conservative investment strategy in relation to the funds it has been able to recover.

Dalriada is aware that certain comments have been made by or on behalf of members lately that it is important are corrected.

First, the judgment of Mr Justice Bean in December 2011 stands as a binding decision of the Court. His decision was that the MPVA payments were unauthorised payments and were void.

Secondly, as a result, they are arguably repayable. What approach is taken as regards repayment is entirely distinct from what stance HMRC might take regarding tax charges.

Dalriada will take action in this regard only as directed by the Court and, then, only after a representative beneficiary has had the opportunity of putting forward arguments on behalf of the members.

Investments – Dalriada has recovered the full £1m invested in Entrepreneurs Capital Holdings Limited (“ECH”) along with interest.

More detailed information is set out in our 11th Announcement which can be downloaded from the link above.

Update 13th November 2014

Dalriada has issued further Announcements on 23rd July and 28th August. The 23rd July Announcement was a brief update. The 28th August Announcement set out the background to Dalriada’s appointment to the Ark Schemes and summarised the actions it has taken since and what actions it intends to take in the future. It is a more user friendly summary of all the previous Announcements issued so far.

On 10th November Dalriada issued its latest (14th) Announcement. Dalriada is aware that many members are now being contacted by HMRC and this Announcement provides information on the current approach being taken by HMRC and sets out how members can respond to HMRC by way of a Frequently Asked Questions document attached the Announcement.

Copies of all Announcements can be downloaded from the links above. Copies of HMRC’s Frequently Asked Questions document can also be downloaded from the following link:

HMRC FAQs

Our 14th Announcement also confirmed that Dalriada’s applications to Court to seek directions on the management of the Schemes going forward are now largely prepared. The usual approach in such applications is to have a Representative Beneficiary (or Beneficiaries) who represent the interests of the members generally. Dalriada is looking to see if there are any members who are interested in acting as a Representative Beneficiary. More information is set in the Announcement.

The Announcement also provides contact details for Ark Class Action. Ark Class Action is a group established to help and support victims of pension liberation.

Dalriada has been in communication with Ark Class Action and will work with them where appropriate, particularly with regard to ensuring a coordinated response to HMRC.
Dalriada cannot recommend, or advise, members to join Ark
Class Action but has provided contact details in the Announcement such that members can contact the group and decide for themselves if they wish to join.

Dalriada has included here some Frequently Asked Questions (FAQs) and answers. It is hoped that these will provide answers to common questions from members.

Frequently Asked Questions

FREQUENTLY ASKED QUESTIONS WILL BE ADDED HERE FROM TIME TO TIME AS THEY ARE IDENTIFIED – PLEASE CHECK BACK FOR UPDATES.

Q Are the pension schemes’ assets safe?

Dalriada cannot yet confirm this to be the case for all the assets.

Dalriada has obtained control of the schemes’ bank accounts.

Dalriada is actively attempting to gain control of the remaining scheme investments not linked to the MPVA payments. The majority of these investments are in overseas property ventures and would appear to be highly illiquid and have little, if any, realisable value in the short to medium term.

Dalriada is actively seeking to recover funds on behalf of scheme members that have been paid to a number of parties including the Ark companies. A freezing injunction has been obtained in relation to Ark’s bank account as part of this process. There is, however, no guarantee as to how much, if any, of these funds might be recovered.

Dalriada has appointed auditors to each Scheme. Accounts for each of the Schemes up to 31 May 2011, the date Dalriada was appointed by the Pensions Regulator, have been audited and are available for download from the appropriate Scheme link above.

Scheme Accounts up to 31st May 2012 have now been audited and are available for download from the appropriate Scheme link above.

Scheme Accounts up to 31st May 2013 have now been audited and are available for download from the appropriate Scheme link above.

Scheme Accounts up to 31st May 2014 have now been audited and are available for download from the appropriate Scheme link above.

Q Will the value of my pension fund be reduced?

Until Dalriada has taken control of the investments and has been able to put a value on those investments, it will not be able to give members an indication of the value of their benefits under the schemes.

A significant proportion of the schemes’ investments are “invested” in MPVA assets. The value of these “investments” is highly uncertain and Dalriada is seeking Court direction as to their legal status.  Dalriada will not be able to begin to place a value on these “assets” until their legal status has been confirmed.

As of Friday 16th December 2011, it has been established that MPVA loans were not validly made.

On 11th January 2012, Dalriada received copies of Notices of Appeal, lodged by Athena and Minerva. The Court has indicated to our legal advisers that it will aim to make its first decision in the window 1st to 22nd March 2012. At that point, the Court could allow Athena and Minerva permission to appeal, or it could refuse permission or, alternatively, require a hearing to determine whether or not to allow permission.

If permission to appeal is allowed, a hearing of the appeal will follow.

Announcements 9 and 11 and our updates of 28th January 2013, 17th February 2013 and 17th April 2014, set out above, give the latest position with regard to the application for permission to appeal.

Dalriada has performed a reconciliation to ensure that it has exact details of the individuals who have transferred money into the Schemes and details of the recipients of MPVA payments since this is not completely clear from the documents and computer files provided by Ark.

Investments in overseas property ventures appear to be highly illiquid and have little, if any, realisable value in the short to medium term. However Dalriada has reached agreement for the return of £4m plus interest with regard to the Cyprus investment. Announcement 9 and our update of the 28th January provide more details.

Announcement 9 also provides an update on the other investments.

Announcement 11 provides a further update on the other investments.

Announcements 12, 13 and 14 all provide a further update on the other investments.

It is likely that, as a result of the nature of the investments, the charges deducted by the administrators, payments made to introducers and the high cost of resolving the uncertainties involved, the fund value when Dalriada is able to calculate it will be significantly less than the value of funds transferred in.

Q What happens if I have transferred in funds but I have not received an MPVA payment?

You will not now receive an MPVA payment.

Q Can I transfer out of the Schemes to my original scheme (or to another registered pension scheme)?

Yes, you have a statutory right to transfer your benefits.

Until Dalriada can value the funds it will be unable to pay out any transfer values.

It will be many months before any transfer values can be paid out.

Members are entitled under the Occupational Pension Schemes (Transfer Values) Regulations 1996 to a transfer value quotation within three months of the date of request. Where necessary, we have made the Pensions Regulator aware of the non-compliance with the three month disclosure requirement. The Pensions Regulator has acknowledged the non-compliance and confirmed that it does not consider that it would be appropriate to impose a penalty in relation to this breach. If necessary, Dalriada expects to seek an extension from the Pensions Regulator to the normal period for paying out transfer values.

Your original scheme would normally be under no obligation to accept you back.

Q What happens if my transfer has not been completed yet?

Dalriada has written to potential members that it has identified as possibly being in the process of transferring.  We have advised these people to advise the administrators of the transferring scheme that the transfer is not to go ahead.

If Dalriada receives any cheques in respect of transfer payments, these will not be banked and will be returned to the administrators of the transferring scheme.

Where transfer payments have been made direct to the trustees’ bank account, we are unable to prevent these transfers from taking place.

Q Are PRPs and MPVAs illegal?

Dalriada has been advised by a leading barrister (a Queen’s Counsel or “QC” who specialises in pensions and trust law matters) that there is a strong possibility that the MPVA payments are “void”.  Dalriada will seek Court direction on whether this is the case and has issued proceedings in the High Court to clarify the status of the MPVAs.

David Faulds, a scheme member of one of the six schemes that have entered into pensions reciprocation arrangements, has kindly agreed to represent the interests of members in the Court proceedings.

He is referred to as a Representative Beneficiary.

Mr Faulds has obtained legal representation through solicitors, Gateley, who in turn have instructed a barrister.

All Mr Faulds’ reasonable costs (which will include the cost of the solicitors and barrister) will have to be met from the assets of the Schemes.

If you wish to make contact with Gateley you can do so by any of the following methods:

Post:          Gateley (Manchester) LLP, Ship Canal House, 98 King Street, Manchester, M2 4WU

Email:       pensionschememembers@gateleyuk.com

Alternatively, if you wish to speak to someone at Gateley, they will be available to take telephone calls between the hours of 10am and midday and 2pm and 4pm Monday to Friday on 0161 836 7963.

Whilst members are not discouraged from contacting Gateley, because costs are being met from the assets of the Schemes, it would be sensible to limit telephone calls to relaying information that it may be useful to bring to Mr Faulds’ attention for the purposes of the Court proceedings.

Once the Court has determined the initial question of the legal status of the MPVAs it is very likely that Dalriada will need to put some further questions to the Court to provide them with direction as to how to operate the Schemes.

Dalriada would like to stress that it takes a neutral stance as regards the outcome of the Court Proceedings. Dalriada has been advised that it cannot administer the MPVA arrangements without legal clarification from the Court.

To avoid the need to incur the costs of multiple beneficiaries who may have differing interests Dalriada will, for the purposes of the Court proceedings, put forward the argument that the MPVAs were invalidly made and that the loan payments received pursuant to the MPVAs were void or voidable. Mr Faulds will, again purely in a representative capacity, argue to the contrary that the MPVAs were valid and should be operated in the manner originally intended.

The Court hearing was held between the 29th November and the 2nd December 2011. The judgment was handed down on 16th December 2011. MPVA loans were found to have been invalidly made.

On 11th January 2012, Dalriada received copies of Notices of Appeal, lodged by Athena and Minerva. The Court has indicated to our legal advisers that it will aim to make its first decision in the window 1st to 22nd March 2012. At that point, the Court could allow Athena and Minerva permission to appeal, or it could refuse permission or, alternatively, require a hearing to determine whether or not to allow permission.

If permission to appeal is allowed, a hearing of the appeal will follow.

Announcements 9 and 11 and our updates of 28th January 2013, 17th February 2013 and 17th April 2014, set out above, give the latest position with regard to the application for permission to appeal.

Our Announcement of 10 November (Announcement 14) confirmed that the application for permission to appeal had been dismissed and that our applications to Court to seek directions on the management of the Schemes going forward are now largely prepared. That Announcement also sought applications from members to act as a representative beneficiary.

Q Will I have to pay back any money I have received under an MPVA?

If the Court decides that MPVAs are “void” we will be required to seek repayment of the money. The objective would be to put the schemes back to the position they would have been in if the void transactions had never taken place, so far as possible.

As of 16th December it has been confirmed that MPVA loans were invalidly made.

On 11th January 2012, Dalriada received copies of Notices of Appeal, lodged by Athena and Minerva. The Court has indicated to our legal advisers that it will aim to make its first decision in the window 1st to 22nd March 2012. At that point, the Court could allow Athena and Minerva permission to appeal, or it could refuse permission or, alternatively, require a hearing to determine whether or not to allow permission.

If permission to appeal is allowed, a hearing of the appeal will follow.

Announcements 9 and 11 and our updates of 28th January 2013, 17th February 2013 and 17th April 2014, set out above, give the latest position with regard to the application for permission to appeal.

Members who have received an MPVA payment should now arrange their financial affairs on the basis that they are required to repay all of the money they have received.

As set out in Announcements 6 and 9 (16th December 2011 and 28th January 2013), those members in receipt of an MPVA payment may be subject to unauthorised payment charges by HMRC.

As set out in Announcements 11 and 14, the position taken by HMRC means that members who have not received an MPVA payment might also be subject to unauthorised payment charges by HMRC.

Q I feel that I have been wrongly advised to transfer into a scheme.  Who should I complain to?

Dalriada’s role as Independent Trustee is to manage the schemes in the best interests of their members.  If any member feels that they were wrongly advised to transfer into a scheme then Dalriada cannot assist with this complaint.  You should immediately contact the firm that provided the advice.

You can get free advice from organisations like the Citizens Advice Bureau or see the Money Advice Service’s tips on making a complaint.

If a member has a complaint about any action taken by Dalriada (or prior to Dalriada’s appointment on 31 May the other trustees of the schemes) than you should complain to Dalriada.

You may also find it helpful to read our page about the regulation of pension schemes.  If you wish to speak to someone independent of Dalriada, The Pensions Advisory Service provides a free, independent source of advice.

Q What should I do if I have any further questions?

If you are a member or prospective member of one of the schemes and have a personal question please contact Dalriada in one of the following ways:

By using the Get in Touch form on this website.

By telephoning our helpline for members
028 9041 2756

By post to
Dalriada Trustees Limited
22 Great Victoria Street
Belfast
BT2 7BA

By e-mailing suzanne_wilson@dalriadatrustees.co.uk

Media enquiries should be directed to the contacts named on our Media Page.