Three directors of an insolvent payday loan firm which received cash from pension liberation schemes have been disqualified.
Speed-e-Loans.com (SEL), used £1.2 million from private investors via the schemes to meet its existing debts.
Directors Philip Miller, Robert Alan Davies and Daniel Jonathan Miller have been banned from acting as directors for nine, six and five years respectively for breaching fiduciary duties and the duties of care, skill and diligence.
At administration, the firm had assets listed at £150,000 and liabilities to creditors of £4.4 million
SEL continued to receive private investment via liberation schemes while it was not solvent and had ceased lending to new clients. Investors also took on liability for a substantial tax charge and exposure to the risk of penalties.
It also continued to receive investment for a further five months after learning that one of the brokers responsible was involved in a fraud trial.
The total of £1.2 million from private investors was lost.
Insolvency Service chief investigator Cheryl Lambert said: ‘The directors were collectively, and at the kindest interpretation, recklessly negligent in their desperation to save the company.
‘None of them asked simple, obvious questions when it should have been clear to them the brokers were taking nearly 50% in fees, nor the type of scheme they had become involved with and the individuals who were pushing the scheme.’
Philip Miller took over as SEL’s managing director following his predecessor’s suspension in July 2012, and the firm ceased lending to new clients by August 2012.
However, Miller, a major shareholder prior to his appointment as managing director, proposed that SEL receive funds from a pension liberation scheme operated by third party brokers.
According to the Insolvency Service, SEL ‘was to be the investment through which members of the public derived guaranteed annual dividend payments of 5% as well as a guaranteed return of the whole of their “investments” in ten years’.
SEL would receive 54% of the funds provided by the public, but was contractually obliged to repay 100% plus the aforementioned 5% dividend.
From October 2012, the public invested at least £2.6 million through the third-party brokers, of which £1.2 million was received by SEL. None of this was used to trade, but rather to pay off the firm’s debts.
Lambert said Miller ‘stood to gain financially’ from individual transactions via a commission.
SEL became aware in January 2013 that one of the brokers operating the scheme was on trial for fraud, but continued taking investment until May 2013, before entering administration the following month.
Lambert added: ‘You cannot hide behind a lack of technical knowledge of specialist schemes – you have to exercise independent and critical thought.’