The admonition delivered to FirstPort for attempting to sell off house managers’ flats has not satisfied complainant Alex Ellison.
“I am, of course, pleased that you upheld my complaint and that you have imposed disciplinary sanctions on FirstPort,” she has written to the ARMA regulator Keith Hill.
“… However, disciplinary sanctions alone do not seem to adequately address the seriousness of what took place.”
Mrs Ellison complained that FirstPort Peverel was encouraging elderly residents at Mere Court in Knutsford to agree to ending the in-house manager service specified in their leases.
Peverel / FirstPort wrongly told the residents that the house manager’s flat belonged to the freeholder (one of the myriad companies owned by the Tchenguiz Family Trust based in the British Virgin Islands).
In fact, it unaccountably belonged to Peverel / FirstPort itself, and its local staff were to receive a commission once the residents had been won over and the flat sold.
After the arrest of Vincent and Robert Tchenguiz in March 2011, on wrong evidence for which they won a judicial review, Peverel – which they owned and which managed the Tchenguiz retirement and prime London freeholds – was pitched into administration.
In 2009 hundreds of leases were issued to house managers’ flats, which as communal parts to the retirements sites hitherto did not have leases at all.
In the meltdown of the Tchenguiz empire this portfolio of house managers’ flats ended up in the hands of Peverel, now FirstPort.
Indeed, these assets were key to RBS and other banks lending to the company, which came out of administration in 2012.
What has never been explained is why Peverel / FirstPort owns these assets at all.
According to Mrs Ellison, Keith Howell, the FirstPort CEO, referring to ‘probably less than a hundred’ sales of these house managers’ flats.
In any event, selling them where possible appears to be the policy of FirstPort, and it remunerates its local staff for their powers of persuasion with the elderly residents in pulling off the deals.
Mrs Ellison says: “ARMA was supposed to address the deficiencies of failing self-regulation in the sector. I am left feeling it didn’t rise to the challenge.”
Mrs Ellison’s full letter to Keith Hill is below (Keith Hill is in fact Mr Hill, having declined a knighthood in 2010). Mrs Ellison asserts that the Serious Fraud Office felt that a fraud may have occurred. That is not our understanding, and no fraud has been established.
27th June 2016
Re: Publication of Disciplinary Decision of ARMA Independent Regulator and Regulatory Panel
Dear Sir Keith,
Thank you for sending me a copy of the above report dated 21st June 2016, following the hearing into my complaint against Peverel/Firstport. I am of course pleased that you upheld my complaint and that you have imposed disciplinary sanctions on Firstport. As you know, I have spent since 2014 trying to bring Firstport to account for its wrongdoing at Mere Court in Knutsford.
However disciplinary sanctions alone do not seem to me to adequately address the seriousness of what took place. Mere Court was but one of many developments where Peverel tried to gain control of the house manager’s flat. In the case of Mere Court, the company was thwarted by the residents when they realised they had been lied to, but there have been many other developments where the house manager’s flat was acquired without questions being asked.
Leaving aside the matter of whether these ‘created’ leases are actually legal (as you know the Serious Fraud Office believed fraudulent activity may have occurred) , the fact was that when residents were persuaded by Peverel/Firstport into giving up their resident manager, the company paid a ‘non-negotiable’ £10,000 into the contingency fund and thereafter sold the flats off for a huge profit. At the hearing Firstport directors did not fully answer how many flats have been subsequently sold on, Keith [Nigel] Howell referred to ‘probably less than a hundred’, but even this small fraction represents tens of millions of pounds which has been gained from elderly people who were naive if not misinformed.
It will never be known how many developments were targeted with the same strategy as at Mere Court , but the Knutsford development surely wasn’t unique. The Peverel managers of Mere Court involved themselves in every step of the way in their attempt to gain possession of the flat, from the attempt to stop the formation of a Residents Association to the use of school playground bully tactics for anyone who asked too many questions, to intimidating behaviour and deceipt. That this behaviour was against elderly vulnerable people makes it an appalling offence.
With the Mere Court case proved, surely Firstport should have been required to make compensation to the developments where they have acquired the HM flat for such a paltry sum. When Peverel admitted to the Cirrhus [Cirrus] price fixing it made compensation to the 65 developments the OFT found had been victims of the scandal.
The actual legality of these ‘created’ leases is still under dispute. The leases belonging to the residents in developments where the HM flat has been given up have not been changed to take account of changed responsibilities which is unsatisfactory from a legal perspective. With this matter still so resolved Firstport should not have been given permission to now apply for ARMA-Q membership.
ARMA was set up to address the deficiencies of a failed self-regulation system in the leasehold sector. I cannot believe that simple disciplinary sanctions will prevent any further wrongdoing in the future.