Ex-Norton owner pleads guilty to illegally investing pension funds

The Pensions Regulator announced in August 2021 that it would prosecute Stuart Garner, who was accused of transferring £14mn of assets from three pension schemes — Donnington 2012, Commando 2012 and Donnington MC, which have 227 members between them — into his Norton business.

The business subsequently failed, leaving members unsure whether they would ever see any of the money owed to them.

Garner appeared before Derby Magistrates’ Court on February 7 charged with illegally investing money from the three schemes of which he was the sole trustee in a company he owned.

Stuart Garner failed to comply with restrictions on investments which are designed to protect the funds of pension schemes

Nicola Parish, the Pensions Regulator

He pleaded guilty to three charges of breaching employer-related investment rules by investing more than 5 per cent of assets from each scheme into his business.

Nicola Parish, executive director of frontline regulation at TPR, said: “As a trustee, Stuart Garner failed to comply with restrictions on investments which are designed to protect the funds of pension schemes.

"Trustees have a vital role in protecting the benefits of members and we will take action where that responsibility is abused. Trustees should be clear on when a pension scheme can invest in its sponsoring employer.”

A seven-year ordeal

The schemes were established by Garner in his capacity as director of Manorcrest, their principal employer. They were then sold to prospective members as a means of investing in the marquee Norton Motorcycles business.

The schemes’ administration was undertaken by two directors of T12 Administration who were subsequently jailed for pension fraud in a separate case. Garner then appointed LD Administration in their place, only for its director, Margaret Liddell, to admit to the Pensions Ombudsman that she and her staff had no training in, or experience of, administering occupational pension schemes.

In the interim, 228 members across the three schemes had their entire pension pots invested in Norton Motorcycles, which the ombudsman said was a “clear conflict of interest” in light of Garner’s relationship with the business.

TPR appointed Dalriada Trustees to oversee the schemes in 2019, which took the view that, because of Norton’s precarious financial position, supporting the company in its bid to raise funds represented the best chance of members recovering their money.

Attempting to extract funds either from the business or from Garner personally was deemed unlikely to succeed.

Norton then fell into administration in January 2020, leaving members unsure whether they would ever get back the £14mn owed to them.

The case raised questions about TPR’s efficacy, prompting it to conduct an internal review of its approach and response.

In January, the case was cited by the ombudsman, who also pointed to recent cases with the Grosvenor Pension Scheme and the Henry Davidson Limited Pension Scheme, as prompting the creation of a new specialist team tasked with investigating breaches of trust, and allegations of dishonest and fraudulent behaviour by scheme trustees.

Pensions Ombudsman Anthony Arter said of the new team: “A noticeable trend in recent years has been the increase in cases relating to trustee dishonesty and wrongdoing, leading to substantial losses for individual pension scheme members. The Norton determination demonstrated a change of approach for us, which not only holds trustees personally liable but also has the potential to benefit all scheme members.”

Garner is due to appear for sentencing at Derby Crown Court on February 28.