This was a complex case that required fast, decisive action with a strategic approach to remove schemes from the control of fraudsters and protect savers from further harm.
The focus of our case was to return money to savers that had been stolen by scammers and to prevent those involved from ever operating in the pensions market ever again.
Within the Regulatory Intervention Report (RIR), we set out how we used our powers to disrupt a pension scam, remove schemes from the control of fraudsters and prosecute those responsible, leading to two offenders being jailed for more than 10 years in total.
We appointed independent trustees, Dalriada Trustees Limited, to secure the scheme assets, protect savers’ interests and seek compensation. An initial payment of £13.2 million has been paid by the Fraud Compensation Fund (FCF) to the schemes affected by the criminal enterprise.
Whistleblowers were pivotal to the success of this case and are vital in our efforts to tackle scammers. We encourage trustees, advisers and savers who have suspicions or concerns about the way their workplace pension is being run to first make a report to Action Fraud. The second step should be to consider reporting a concern to us about any of the following:
- a potential criminal offence (s) in relation to an occupational pension scheme or workplace private pension arrangements or automatic enrolment
- a breach of an identified legal obligation in relation to an occupational pension scheme or workplace private arrangements or automatic enrolment
- concealing information about either of the above
Case summary and background
Between 2012 and 2014, 245 members of pension schemes were persuaded to transfer a total of £13.7 million in pension savings into 11 schemes. 10 of these were controlled by Alan Barratt and Susan Dalton, who operated out of a call centre in Spain. As well as being trustees of the schemes, Barratt and Dalton were directly involved in persuading members to transfer their pension savings. Each member’s pension pot was worth, on average, £55,000.
Once their savings were transferred, they were either invested in low value, unregulated and unsuitable investments and ultimately lost, or spent on fees, charges and expenses for the benefit of the fraudsters and their associates.
Initial investigation
We first became aware of concerns in 2014 when we received a whistleblowing alert from directors of Friendly Pensions Limited (FPL) about possible pension scam activity. They raised concerns around the conduct of David Austin, the sole shareholder of FPL, and his connection to Alan Barratt and Susan Dalton.
We acted quickly to collect evidence that showed members of secure, legitimate pension schemes were contacted by Barratt, Dalton and others. These members were deceived into transferring their pension savings into fraudulent schemes controlled by the criminal enterprise.
Dalton, Barratt and others contacted pension savers (whose details were obtained through website adverts, texts and cold calling) and used offers of “tax free cash” rebates and higher returns on their pension investments if they transferred their money.
The sums that were paid to victims were in fact unauthorised payments taken from their own pension funds, which put them at risk of tax charges. Throughout the transfer process, victims were falsely told that these payments were legitimate but were asked to keep them secret.
We identified that in some cases where members sought to transfer their savings, the legitimate ceding pension schemes were rightly suspicious of the transfer requests and queried whether the money was being transferred into genuine workplace pension schemes.
Dalton and Barratt misled their victims by making false claims. In some circumstances they said that the members were employees of companies belonging to David Austin and backed this up by using fake employment contracts. They also encouraged some victims to use template letters they provided to push back on the ceding schemes and insist on their obligation to transfer.
Once the money was transferred to the scam schemes, and the rebate paid to victims from their own funds, savings were not put into higher return investments as promised. While some of the money was nominally invested, it was transferred into inappropriate, low value, high-risk vehicles which were unlikely to produce a return. The majority of funds were instead paid to David Austin, Alan Barratt, Susan Dalton and their associates.
Regulatory proceedings
We took action to protect the schemes in light of the serious risks to savers. In December 2014, we used powers under section 7 of the Pensions Act 1995 to secure the schemes. We removed them from Barratt’s and Dalton’s control and appointed an independent trustee to have exclusive control of the schemes. In August 2018, we prohibited Alan Barratt and Susan Dalton under section 3(1) of the Pension Act 1995 from acting as trustees to trust schemes in general on the grounds that they were not fit and proper to do so.
Read the Determination notice for Alan Barratt.
Read the Determination notice for Susan Dalton.
Read the Determination notice for Barratt and Dalton schemes.
Civil proceedings
In June 2016, we brought a restitution claim in the High Court under section 16 Pensions Act 2004 against a total of eight defendants, including Alan Barratt and Susan Dalton, to recover the money lost by savers as a result of this pension fraud.
That case was heard in December 2017 and judgment was handed down the following month. His Honour Judge Pelling found that Barratt and Dalton were concerned in the dishonest misuse and misappropriation of pension scheme assets. They were made jointly and severally liable (with David Austin) for all the sums transferred out of the schemes which had been under their control. Alan Barratt was ordered to repay £7.7 million, and Susan Dalton, £5.9 million. However the majority of the money taken from the schemes had already been spent and was therefore difficult to recover.
Criminal investigation
Following the conclusion of our regulatory and civil proceedings, a criminal investigation began and our case team obtained new evidence connected to the crime. This included a sales pitch, which evidenced use of high-pressure tactics to lure people into transferring their pension employed by Barratt, Dalton and others. During this period, David Austin, passed away.
Criminal proceedings
We were satisfied that the tests in the Code for Crown Prosecutors were met and instituted criminal proceedings against Barratt, Dalton and a third defendant, Julian Hanson, for fraud. We alleged that the defendants had dishonestly abused their position as trustees of various pensions schemes to make gains for themselves or others, or to expose another to a risk of loss.
We had intelligence that Barratt and Dalton were living in Spain. Our case team worked with the Metropolitan Police to obtain domestic and European warrants to authorise their arrest. In January 2021, Susan Dalton was arrested at Manchester Airport as she was due to fly back to Spain. In March 2021, Alan Barratt surrendered to Metropolitan Police officers from the Extradition Unit at Alicante Airport. Mr Barratt was returned to the UK and produced at Westminster Magistrates’ Court.
In April 2021, Susan Dalton pleaded guilty and her case was committed for sentence at Southwark Crown Court. In May 2021, Alan Barratt and Julian Hanson pleaded not guilty and their case was listed for trial in June 2022. Ms Dalton’s case was adjourned for sentence until the conclusion of the trial.
In January 2022, Alan Barratt changed his plea to guilty. After an extensive review, we offered no evidence against Julian Hanson as we determined that it was no longer in the public interest to continue a prosecution against him.
Barratt and Dalton appeared at Southwark Crown Court in April 2022 for sentence. Barratt was sentenced to five years and seven months in prison and Dalton received a prison term of four years and eight months. The pair were also banned from acting as company directors for eight years.
Following the convictions, we took action under the Proceeds of Crime Act 2002 to confiscate the defendants’ assets. A final confiscation hearing took place in January 2024. It determined that Alan Barratt had benefited by £263,000 from fraudulent activity and was ordered to pay £9,770. Susan Dalton, benefited by £136,487 from fraudulent activity and was ordered to pay £25,101. Both have paid the full amount, which has been paid back into the schemes as compensation.
Outcome
In January 2024, the members were notified that the 11 schemes had collectively received initial compensation payments of £13.2 million from the Fraud Compensation Fund, successfully claimed by Dalriada Trustees Limited. The full and final amount of compensation due to the schemes has still to be determined.
Dalton and Barratt are prohibited from acting as scheme trustees and have been added to our list of prohibited trustees.
Dalton and Barratt are serving prison sentences for the roles that they played in this scam and their assets have been confiscated by the courts to compensate the schemes.
Our approach
Since this case started, our approach to scams has evolved, and this was the first case where we applied for an International Arrest Warrant, working with the Metropolitan Police. We are prepared to use all powers available to us to bring criminals like Alan Barratt and Susan Dalton to justice and return the savings of scheme members wherever possible. Working with colleagues from other regulators and law enforcement agencies where necessary, we will pursue fraudsters who exploit others’ hard-earned savings for personal gain.
Timeline of events
| Date | Event |
|---|---|
| 2012 to 2014 | Scam pensions operation is active. |
| November 2014 | Whistleblower report received. |
| December 2014 |
TPR appoint Dalriada Trustees Ltd as an independent trustee under section 7 (3) (a), (c) and (d) of the Pensions Act 1995. |
| December 2014 to January 2018 | TPR investigates and brings a High Court case. An order is given against the defendants to restore funds to the pension schemes. No monies were paid to satisfy the order. In January 2018, HHJ Pelling gives a ruling and recommends the case be referred to the Director of Public Prosecutions with a view to commence criminal proceedings. Read High Court Judgment. |
| September 2017 | TPR criminal investigation opened. |
| March 2018 | Prohibition investigation opened. |
| August 2018 | TPR prohibits Susan Dalton and Alan Barratt and others from acting as trustees of trust schemes, under section 3 (1) (c) of the Pensions Act 1995. Read Alan Barratt Determination Notice. Read Susan Dalton Determination Notice. |
| December 2020 | TPR works with the Metropolitan Police to obtain domestic and European Arrest Warrants for Susan Dalton and Alan Barratt. |
| January 2021 | Susan Dalton is arrested at Manchester Airport and appeared at Westminster Magistrates' Court. The case is adjourned so that co-defendants, Julian Hanson and Alan Barratt, can be arrested and brought before the court. |
| March 2021 | Alan Barratt is arrested in Alicante, Spain under a European Arrest Warrant. Mr Barratt appears at Westminster Magistrates’ Court and the case is adjourned until April 2021. |
| April 2021 | Alan Barratt, Susan Dalton and Julian Hanson appear at Westminster Magistrates' Court charged with an offence of fraud by abuse of position. Ms Dalton pleads guilty to fraud and her case is committed for sentence at Southwark Crown Court. Alan Barratt indicated a not guilty plea and Julian Hanson did not indicate a plea and the case is sent for trial at Southwark Crown Court. |
| May 2021 | Alan Barratt and Julian Hanson plead not guilty to fraud. Their case is listed for trial for June 2022. Ms Dalton’s case is adjourned for sentence at the conclusion of the trial of her co-defendants |
| January 2022 | Alan Barratt changes his plea to guilty of fraud. Julian Hanson’s trial remains listed in June 2022. |
| March 2022 | After an extensive review of the evidence against Julian Hanson, TPR decide that whilst the evidential test was still met, it was not in the public interest to continue with the prosecution against him. A verdict of not guilty was entered against Julian Hanson. |
| April 2022 | Alan Barratt and Susan Dalton appear at Southwark Crown Court. Mr Barratt and Ms Dalton are sentenced for offences of fraud by abuse of position contrary to section 1 and 4 of the Fraud Act 2006. Mr Barratt is sentenced to five years and seven months in prison and banned as acting as a company director for eight years. Ms Dalton is sentenced to four years and eight months in prison and banned as acting as a company director for eight years. A timetable was set under the Proceeds of Crime Act 2002. |
| January 2024 | Final compensation and confiscation orders were made at Southwark Crown Court. The court orders Mr Barratt to pay £9,770 within three months. Mr Barratt benefitted by £263,000.14 from his role in the criminal activity. The court orders Ms Dalton to pay £25,101 within three months. Ms Dalton benefitted by £136,487 from her role in the criminal activity. If either defendant defaulted on the payments, they would be subject to further imprisonment and remain liable for the money. Both defendants have paid the full amount that the Court ordered. |
| January 2024 | Scheme members are notified that the Fraud Compensation Fund agree to award schemes compensation close to the full loss amount. Read Dalriada communication. |