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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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3 Comments

3 Comments

  1. Gareth Evans

    April 25, 2014 at 6:07 pm

    Disgraceful, both should hang your heads in shame and leave Pembrokeshire for good.

  2. malclom cummings

    April 26, 2014 at 10:07 am

    Crooks the pair of them. Shamefull what they have done .Makes you think have they been at it elsewhere in their work as IFAS.

  3. ronnie briggs

    May 27, 2014 at 7:28 pm

    if they had a brain between them may be they would have known they could not get away with what they were up too. door to door salesmen or tesco shelf stacker who would trust someone like that again hopefully they will look into there all so called business dealings

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Business

Old barracks promised new lease of life

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THE COMPANY which has purchased the iconic defensible barracks in Pembroke Dock have promised to breathe new life into the historic building.

The grade II fort was built in the Victorian era to provide a military defence to the Royal Dockyard. It was recently sold for an undisclosed sum to VR1844 Ltd. The company directors are listed as Jonathan McDermott, Emma Jane Morby, Lai Hang Seto, and Iain Trevor Walker.

VR1844Ltd office manager Tanya McDermott said: “VR1844 believe people never truly own a building but are the buildings guardians for a period of time.

“Taking the view that it is only the right development for the right building at the right time it is our privilege to bring the building back into life, repair, nurture and give back to the local community, not to shut the main doors and lock the building away from people who are interested in it and its history.

“VR1844 Ltd who have brought this very under-loved and not looked after building, want to bring the buildings back into life with a mix of community uses, together with a number of dwellings that will breathe life back into the buildings.
“To do this VR1844 are already working hard with CADW, Pembrokeshire County Council and local councillors to bring forward a scheme that all parties can support, and the community can once again be proud of.”

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Business

Air Link Wales now flying from Haverfordwest

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AVIATION company Flitestar Private Air have launched their new Air Link Wales Programme connecting Haverfordwest, Caernarfon and Cardiff with other regional airports in the UK and Europe.

The company has opened an office in Menai Bridge on Anglesey – managed by James Blackler – and said it is particularly committed to improving air connectivity from North Wales.

The Air Link Wales network currently offers flight charter services from Caernarfon Airport to destinations such as Isle of Man, Glasgow, Edinburgh, Southampton as well as London for connections to and from Gatwick and Heathrow.

They believe Southampton will be particularly popular for passengers connecting to cruises who wish to avoid the long road or rail trip down south.A flight to the south coast for two passengers from Caernarfon would cost £1,820 per person on a Piper PA34 Seneca plane.

Neil Baines, CEO of the Chester based company, said: “As a resident of Wales myself, I’ve often been frustrated by the lack of air connectivity and we are pleased to start to address this through our new Air Link Wales Charter programme which is ideally suited to both leisure and corporate customers.“Flying private can save hours of travel time which is of particular value to Wales-based organisations.”

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Business

Tesco grant boost for Milford Haven children

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AN ORGANISATION working with children in Milford Haven has received a £3,425 grant from a special costal voting round of Tesco’s Bags of Help scheme.
The grant for Clybiau Plant Cymru will go towards delivering workshops and out-of-school childcare clubs that encourage children to play outdoors and connect with nature in coastal areas.

Alex Fudge, the Regional Manager for Clybiau Plant Cymru said the funding will help combat issues of childhood obesity in Wales, giving children the opportunity to play freely and get active away from distractions such as social media.

“We’re truly grateful to Tesco for its support and funding through the Bags of Help scheme,” she said. “We aim to promote health, wellbeing and environmental awareness through fun, outdoor activities, so every donation has a huge impact on kids’ lives.

“The clubs provide valuable play and learning opportunities outside of the school day, enabling parents to work and train, which in turn drives economic growth, tackles poverty and reduces inequalities.”

“Through the funding we are delivering 20 workshops within clubs in the Milford Haven area to children and our staff,” she added. “It will engage up to 340 individuals, as well as providing skills and knowledge which staff can apply on an ongoing basis to provide quality childcare for years to come.”
Tesco shoppers in Milford Haven cast their votes using blue tokens handed out at checkouts as part of the special voting round supporting groups in 42 coastal communities across the UK. More than 100 projects working to improve Britain’s coastline shared the combined funding pot worth £300,000.
Bags of Help, run in partnership with the charity Groundwork, sees funding awarded to thousands of local community projects every year. To date £80m has been awarded through the scheme, with more than £5m awarded to projects in Wales.

Claire de Silva, Tesco’s Head of Community, said: “Bags of Help has been a huge success since we introduced the scheme and we are glad to be able to support great projects, including this coastal scheme in Milford Haven.

“We saw a fantastic mix of projects shortlisted and I’d like to thank customers for casting their votes and supporting these important initiatives in their community.”

The scheme is ran in partnership with community charity Groundwork. Groundwork’s National Chief Executive, Graham Duxbury, said: “Bags of Help continues to enable local communities up and down Britain to improve their local spaces and the places that matter to them. We’re pleased to be able to be a part of the journey and provide support and encouragement to groups enjoying, protecting and improving Britain’s coastlines.”

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