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1 Stop directors made millions

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1stopTHE PEMBROKESHIRE HERALD can reveal that 1 Stop Financial Services directors Timothy Hughes and Andrew Rees obtained massive incomes while mis-selling pensions products to nearly 2,000 customers across the UK.

Mr Hughes’ total declared income received during the period October 2010 to November 2012 was £1,511,846, while Mr Rees benefited to the tune of £1,181,437 at the same time.

After obtaining further information from the Financial Conduct Authority (FCA), the Pembrokeshire Herald is able to expand and clarify its article concerning the activities of Haverfordwest financial advisors Tim Hughes and Andrew Rees, who formerly traded as 1 Stop Financial Services.

The Herald can reveal that, while the pair were cleared of dishonesty by the FCA, elements of the conduct that led to the pair being ordered to pay penalties to the Financial Services Compensation Scheme in the region of £500,000, are capable of being construed as sharp practice.

In particular, the FCA highlights how the pair managed to rake off referral fees for themselves from a separate and unregulated company, EGI, of which they were both directors and shareholders.

Mr Rees and Mr Hughes not only obtained commission as introducers of business but fees from their customers in the region of £3,000 a time.

This receipt of financial benefit created a conflict of interest, as 1 Stop advised customers to transfer their pensions into a SIPP in order to purchase an underlying investment when Mr Rees and Mr Hughes had also a financial interest in facilitating the sale of that investment to the customer (through EGI). However, the pair failed to disclose, manage and mitigate adequately this conflict of interest.

Even when a declaration was placed into customer documentation recording the link between 1 Stop and EGI, it failed to mention the financial interest of Mr Rees or Mr Hughes in EGI.

As a result of their actions, 1,959 of 1 Stop’s customers were at risk of having invested a total of £112,331,229, mostly from pension funds including some final salary schemes, into SIPPs which may not have been suitable for them.

The FCA also found that customers’ wishes to securely invest their pension savings in secure products were ignored and risky investments entered into instead. In the case of one customer who wished to adopt a low-risk strategy, their final salary pension fund was channeled into an unsuitable and very risky investment.

In addition, customers including a joiner, builder and a publican were all certified by Messrs Rees and Hughes as having a high level of understanding of risky “wrapper-type” investments involving complex property transactions. The FCA did not believe the records created by 1 Stop in this regard.
49% of those customers affected were encourage to invest in overseas property developments operated by Harlequin Properties. None of those customers received any advice from 1 Stop on the suitability of that overseas property investment.

The Harlequin group of companies are engaged in the development and distribution of overseas property investments and resorts.

On January 18, 2013, the FCA issued an alert to financial advisers about investments in overseas properties bought through Harlequin Property.  In March, the Serious Fraud Office (SFO) announced that it, together with Essex Police, was looking into complaints in relation to the Harlequin group.   Investors who have invested in specific resorts were asked to contact the SFO.

On May 3, 2013 administrators were appointed for Harlequin Properties.

1 Stop customers who invested in risky investments on the advice of Mr Rees and Mr Hughes have been placed at significant risk of potentially losing all of their money.

In light of their personal liability for the negligent and incorrect advice tendered to their customers, Mr Rees and Mr Hughes were both banned from performing any significant influence function in relation to any regulated activity, carried on by any authorised person, exempt person or exempt professional firm.

In both cases, the FCA decided to impose that penalty neither Mr Rees nor Mr Hughes were judged a fit and proper person in terms of competence and capability.

Harlequin Property are the primary agent for Harlequin Hotels and Resorts, who they say create luxury five star resorts in various locations across the Caribbean. Their mission statement is to,
‘deliver excellent long term returns on clients’ investment by selecting property developments in the most desirable locations’.

The Serious Fraud Office told The Herald that: “The SFO, together with Essex Police, continues to investigate the Harlequin group of companies. We are not able to comment on the on-going investigation nor are we able to comment on an individual’s particular investment.”

In 2013 Harlequin were caught up in a mortgage scandal that saw investors in their properties put at risk of losing around £400 million of deposits.

Investors in Harlequin’s various property ventures and hotel resorts were required to pay a deposit of 30% of their property’s price to secure their investment. Where investors needed to take out a mortgage to pay for the remaining 70% of the property purchase, Harlequin offered to provide a loan which the investors could pay back upon completion.

However, investors were then asked to find around £157,150 each to pay for the properties without the aid of Harlequin’s ‘value guaranteed mortgage’.

Gareth Fatchett, partner at Regulatory Legal speaking in New Model Advisor, said, “Only 2% or respondents could complete without a mortgage, which means 98% of people will go into breach of contract, and Harlequin is saying if they don’t complete their payment they’ll lose their deposit. Advisers should have known from the outset there was not a mortgage available. I’d go so far as to say we’ve seen no evidence of a mortgage relating to a Harlequin property. I suspect the 10% or 15% commissions may have made advisers not check. It’s a huge mis-selling [scandal]. Advisers knew the people they were taking into these contracts couldn’t afford to complete, so therefore the mortgage was by far the most vital thing.”

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Plans for house in Dinas Cross pub car park in Pembrokeshire refused

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AN APPLICATION to build a three-bedroom house on the site of a north Pembrokeshire pub car park has been refused by national park planners.

Julian and Alison Parkes, of The Ship Aground public house, Dinas Cross, sought permission to build the house on nearby land used as a car park for the pub, creating seven new parking spaces nearby to replace the site.

A report by Pembrokeshire Coast National Park planning officers, recommending refusal, said: “The principle of residential development is normally acceptable within centre boundaries, subject to detailed design considerations and compliance with other policies in the local development plan.

“Following consultation, objections have been received from statutory consultees including the Welsh Government Truck Road Agency who have concerns regarding the proposed parking that will serve the Public House. They have directed that planning permission is not granted on the basis of insufficient information.  Concerns have also arisen from third-party letters.”

The report said the design “incorporates a traditional form with modern features and design detailing and will ensure the privacy of neighbours is protected along with the special qualities of the National Park when viewed from the immediate and wider landscape” but added: “Key information relating to the loss of parking to the Public House has not been addressed and how the loss of parking could have an economic impact, also considering that the proposed parking does not meet parking safety standards and further amendments would be required.”

The application was refused on the basis of Trunk Road Agency concerns including a lack of information to demonstrate the number of parking spaces offered would comply with current car parking standards, layout designs for the proposed replacement spaces, and also that insufficient evidence submitted to support the granting of permission for the car park spaces to serve the public house.

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Scheme to upgrade Dinas Cross holiday park withdrawn

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PLANS to create a ‘five-star resort’ in one of Wales’s most popular holiday locations have been withdrawn.

In an application submitted to Pembrokeshire Coast National Park, Chester-based Boutique Resorts Ltd sought permission to relinquish 50 mixed touring pitches (caravans and tents) at Fishguard Bay Resort, Dinas Cross, replacing them with “36 high quality timber-effect holiday lodges”.

The application, recommended for refusal at the April 24 meeting of the national park’s development management committee, also included an increase in the site area of the approved park, a new entrance, a new reception lodge, staff and visitor parking area, with extensive environmental improvements.

The site, established in the 1950s, currently has planning permission for 50 static caravans and 50 mixed touring units, and it is intended 23 of the proposed lodges to be sited at the entrance, with a further 13 throughout the site.

Despite the proposals seeking a reduction in outright numbers, the applicants say the scheme would see an increase in the number of full and part-time jobs associated with the resort, from 29 to 62 jobs.

A previous application was refused in 2019, mainly on visual impact, ecological impact and highway impact, and the applicant has sought to address the issues raised by that refusal, a supporting statement says.

It adds: “The applicant purchased the site in 2014 with the intention to upgrade the site into a five-star luxury resort. This is very much still the applicant’s intention and whilst he has replaced some existing static caravans with luxury lodges, he also seeks to replace the touring caravans and tents with luxury lodges too.

“The resort is now considered one of the most desirable holiday parks on the Pembrokeshire Coast which is evident on the number of holidaymakers who return to the resort year on year. Such is demand for luxury lodges on the site, the applicant requires additional units.

“The applicant now wishes to move the resort further by replacing the mixed touring pitches with luxury lodges but also provide a much-needed new entrance into the resort.”

Objections to the scheme were received from the National Trust, the national park’s strategic policy and ecologist, and the South Wales Trunk Road Agency, and 12 members of the public, along with one letter of support.

The application was recommended for refusal for reasons including it was “likely to have a significant detrimental impact on the special qualities of the National Park by intensifying the visual impact and intrusion of a large static caravan site within the extensive coastal views of this section of the National Park,” it would represent an intensification of the site, and was likely to “have an unacceptable impact on neighbouring residential amenity through increased noise and traffic movements”.

The application, listed for consideration by park planners next week, has since been withdrawn.

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Bluestone National Park Resort payments expected to end 

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A CALL to end a legal agreement for financial contributions associated with the creation of Pembrokeshire’s Bluestone National Park Resort is expected to be backed next week.

In a submitted application to Pembrokeshire Coast National Park on behalf of Bluestone Resorts Ltd, legal firm Red Kite Ltd asks for a cessation of a 2004 Section 106 legal agreement used to pay towards various projects including enhancements to footpaths and bridges.

In a supporting statement says most agreements of this type are time limited, and “today such an arrangement without a timeframe would likely not be considered acceptable by either side.

“However, no such end date was placed on this one. More recently, it was agreed between the parties that the payments would cease in 2025, also known as a ‘statement of common ground’. This is why a formal agreement now has to be made by each of the parties involved.”

The statement says that, since the agreement was made, Bluestone has paid nearly £280,000 through the agreement, adding: “As part of the Statement of Common Ground, it was agreed by Pembrokeshire County Council, Pembrokeshire Coast National Park Authority and Bluestone that a final fee of £113,000 would be paid, spread over 2023, 2024, and 2025 in annual payments of £38,000.”

A report by national park officers, ahead of the Pembrokeshire Coast National Park Development Management Committee meeting of April 24, where it is recommended for approval, says: “The applicant has applied to discharge the Section 106 Legal agreement but the supporting text notes that they applicant is agreeable to making two final payments.

“Having considered the information submitted, officers consider that provided the two final payments are received the legal agreement has served its purpose and can be discharged.

“In order to ensure the two final payments are made, a modification to the Section 106 legal agreement is supported.  This decision is supported by Pembrokeshire County Council, who have received a concurrent application which is also recommended by officers for modification.”

The report says the £280,000 figure presented by Bluestone actually amounted to £318,703.87, taking into account a 2023 payment of £38,891.73, with Pembrokeshire County Council’s S106 monitoring officer confirming the contributions have been spent on a range of public rights of way improvements, primarily in nearby Canaston Woods.

Recommending approval, the report adds: “The authority is satisfied that subject to two further payments of £38,000 to be made in August 2024 and August 2025, the obligation no longer serves a planning purpose and can be discharged and as such the obligation should be modified accordingly.”

The 500-acre Bluestone resort near Narberth has, since its opening, contributed to “more than £100 million to local suppliers, £7 million annually into the local supply chain, £13 million annually into the Pembrokeshire economy through its payroll, and more than £1.5 million spent annually on marketing Bluestone and Pembrokeshire.”

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