Stephen Timms, chair of the Work and Pensions Committee, has written to the Pensions Regulator to describe the “frustratingly slow” process facing members of the schemes of which funds were invested in Norton Motorcycles, as well as complaints about communications from the trustee, Dalriada.
The letter, dated April 25, follows the sentencing of former Norton Motorcycles owner Stuart Garner, who pleaded guilty to illegally investing pension scheme funds in his own company.
Derby Crown Court heard how Garner, who was given a suspended sentence, steered funds into three defined contribution schemes: Dominator 2012, Commando 2012 and Donington MC.
The investments, made between 2012 and 2013, were made in return for preference shares issued by Norton Motorcycle Holdings — the company in which Garner was the majority shareholder and director.
The work that Dalriada and its advisers have carried out over the past three years has been undertaken entirely at risk, and neither Dalriada nor its advisers have been paid anything to date
Dalriada
Garner has been ordered by the Pensions Ombudsman to repay the amount lost on investment in preference shares, less money already recovered, plus interest.
Dalriada Trustees, who was appointed by the regulator, sought ways to recoup funds from Norton, but the business subsequently failed, leaving members unsure whether they would ever see any of the money owed to them.
Trustee communications
But Timms said the process to recover funds and learn from the case has been “frustratingly slow for members of the schemes”, adding that he is aware of “complaints about the communications” from Dalriada, “which has so far incurred costs of £496,800”.
A Dalriada spokesperson said: “On appointment, the three schemes had, and continue to have, no liquid funds.
“The work that Dalriada and its advisers have carried out over the past three years has been undertaken entirely at risk, and neither Dalriada nor its advisers have been paid anything to date.
“The costs accrued to date include third-party costs and relate to a range of activities including the work involved in dealing with the Pensions Ombudsman (which resulted in a determination against Garner, which ultimately allowed Dalriada to pursue a claim against him and which led to his bankruptcy) and also assisting TPR in their successful criminal prosecution of Garner.”
The spokesperson added that “Dalriada’s role is to act in the best interests of the members”.
They continued: “As we have set out to members (and as Timms alludes to) the best chance of members making a significant recovery is through a claim on the Fraud Compensation Fund, and both the ombudsman’s determination and the successful prosecution of Garner should assist in this.
“Further, to the extent that the costs accrued can be attributable to an act of dishonesty, these too can be recovered as part of any FCF claim.
“We anticipate that, in this case, the majority of costs will be attributable to an act of dishonesty and, as such, should not materially impact the amounts returned to members in the event of successful claims on the FCF,” the spokesperson added.
The letter from Timms continues: “If the funds are recovered, these costs may well be worthwhile — we found in our report on pension scams that there is an inevitable trade-off between lower fees and better communication. But members of the schemes face a long wait to find out when and how much of their savings will be returned.”
In response, Dalriada noted that there needs to be a “balance between communication with members and managing the associated costs”.
“We issue announcements to members when there is anything meaningful to report and have kept members up to date with developments on the TPO complaints, Garner’s prosecution and the potential for claims on the FCF. We have a dedicated member website, member contact email address and phone number,” it said.
Dalriada Trustees was appointed by TPR in 2019 to oversee the three schemes. It took the view that, owing to Norton’s uncertain financial position, supporting the company in its bid to raise funds represented the best chance of members recovering their money.
Insolvency practitioners working on behalf of Norton Motorcycles are currently assessing how much money can be transferred to the schemes once the Norton companies have been liquidated.
Regulatory response
The letter to Charles Counsell, chief executive of TPR, asks for clarification on whether the regulator has “reviewed, or made plans to review, its interactions with the Norton schemes”.
In August 2020, Counsell said the watchdog was conducting an internal review of its “approach and response” to the Norton case after TPR was pressed on the matter by Timms.
He noted how in previous correspondence TPR had “assured” the committee that, “in cases where pension savers’ money has not been properly safeguarded by trustees, TPR always carefully considers if it can and should take forward any regulatory action”.
Timms has now asked TPR to “outline the factors taken into consideration and if these have changed over the past 18 months, as well as clarification on what work TPR has undertaken since August 2020 to review the risks posed by small schemes”.
Ex-Norton owner given suspended sentence over missing pensions
Stuart Garner, former owner of Norton Motorcycles, has been given a suspended sentence, after pleading guilty to illegally investing pension scheme money in his failing company.
The letter adds that Dalriada has published guidance on possible routes of compensation for members and issued warnings about the risks posed by secondary scammers, but Timms has sought clarity over whether TPR supports trustees in developing this guidance, querying what support is available to members seeking alternative routes of compensation.
The Labour MP has also asked what the process is for determining whether the schemes are eligible for the FCF.
A spokesperson for TPR said: “We have received the letter and will be responding to it in due course.”
