Earlier this month, a Wolverhampton-based financial advisor was banned by the Insolvency Service for eight years after his firm provided poor pension investment advice, resulting in clients losing £7 million.

Background

Gerard Blakemore was the sole director of Blakemore Wealth Management (“Company“) and the Company was authorised to provide investment advice around Self-Invested Personal Pension schemes (“SIPPs“). The Company traded from Mr Blakemore’s home in Wolverhampton between 2012 and 2018, investing money on behalf of 34 pension savers.

Without inquiring about the suitability of the investments, Mr Blakemore invested his clients’ pensions into high-risk schemes. Clients had originally been aware of how their funds were being invested. However, Mr Blakemore knowingly breached the terms of an Intermediary Agreement with a SIPP operator when he caused the Company to invest £8.3 million of client funds without their knowledge into an unregulated overseas company.

Of the £8.3 million invested, Mr Blakemore was only able to repay £607,500 to the wronged clients. The Company entered into creditors voluntary liquidation in October 2018 and was later brought to the attention of the Insolvency Service due to the level of losses the firm had caused its clients.

In a scathing assessment by Dave Elliot, chief investigator for the Insolvency Service, he observes that Mr Blakemore “totally disregarded his clients’ interests and caused substantial losses” when he invested in unsuitable products.

Personal Profit

Further investigation showed Mr Blakemore had personally benefited from these inappropriate investments and did not disclose this to his clients. Firstly, he paid himself more than £247,000 through salary, dividends and commission. Secondly, Mr Blakemore received £1.7m by transferring £2.1m of client funds to another overseas company, of which he was a director.

Consequences

Mr Blakemore was disqualified from being a company director for eight years on 24 February 2020 after signing a disqualification undertaking. Mr Blakemore did not dispute that he breached his duties as the sole director of the Company when he squandered the funds. Dave Elliot commented on the ban noting, “8 years is a significant ban and removing Gerard Blakemore from the corporate arena will protect investors from further harm due to his poor investment advice.”

Comment

This case highlights the robust attitude government agencies are taking toward enforcement against breaches within SIPP investments. Indeed, the very nature of these schemes allows investors to have freedom to use a wide range of investments in order to grow their pension funds. However, as we are seeing there seems to be a greater emphasis placed on the ‘wrapper’ on these investments rather than the substance of their suitability. Here we find another example of a get tough stance toward non-compliance in this area, this time by the Insolvency Service. We previously reported on the FCA’s approach to similar breaches and you can read about this in more detail here.