April 24, 2017

Carlex meets lawyers over Peverel price-fixing scandal

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Cirrusstrip

A meeting was held in London on Wednesday with lawyers to discuss how Carlex should proceed with the Peverel / Cirrus price-fixing scandal.

Also, the Office of Fair Trading is under scrutiny at the highest level for cutting a leniency deal with Peverel, ostensibly because Peverel turned itself in in December 2009 by admitting the false tendering process that won Cirrus thousands of pounds of contracts for electronic door-entry and warden-call services.

Carlex can demonstrate that it had been in contact with the OFT, the Serious Fraud Office and Trading Standards months before December 2009 over a number of abuses.

Energy Secretary Ed Davey states that he raised issues with the OFT before December 2009 and the Times newspaper reported in detail the Cirrus tendering scams on December 4 2009.

At some point between December 4 and December 22, Peverel admitted the price-fixing involving Cirrus. The full Carlex dossier on the practice was sent to the OFT in January 2010.

A month before turning itself in, the then Peverel chief executive Nigel Bannister was quoted in the Times:

“People are reading a conspiracy into a problem that isn’t there. We use Cirrus because it is an excellent service.”

Carlex has requested that the prime minister call a meeting between the Department of Communities and Local Government and the Ministry of Justice for the OFT to explain itself.

The move is backed by Sir Peter Bottomley.

A meeting with Carlex, Sir Peter, Ed Davey and other politicians is set for Tuesday next week.

From the OFT’s point of view, it is far more tidy and less labour intensive to go along with the fiction that Peverel admitted the price-fixing scandal and investigate on that basis.

The Carlex whistleblowers, who for three years have kept the investigation confidential, feel utterly betrayed by the OFT’s accommodation with Peverel, and the leniency deal.

As with exit fees, which it regards as an unfair contract term, the OFT has shown itself to be feeble and dilatory in handling scandals in the retirement leasehold sector.

Politicians want an explanation why the investigation has taken so long given that Peverel was co-operating with inquiries.

The key question at Carlex’s meeting with lawyers – at which two of the three original Carlex whistle-blowers were present – is: how to get Peverel / Cirrus to pay back the money it wrongfully took from pensioners.

Peverel / Cirrus ran the bogus tendering process – where stooge companies put in higher tenders than Cirrus, making its proposal the most attractive on price – at sites where the contingency funds were sufficiently large to pay for the work.

Carlex will therefore have to litigate to get the money paid back.

To do so it is vitally important that residents at sites where Cirrus carried out these works between 2005-2009 make themselves known.

The case can then be taken to the Competition Appeal Tribunal for a ruling.

Carlex has secured the pro bono backing of a major firm of London solicitors, and is confident that in this case it will have no difficulty securing the services of barristers as well.

The full OFT report is expected in September / October.

Comments

  1. OMhostage says:

    Fantastic news. Could Carlex launch a reward fund for information leading to prosecutions for other scams?

    There are surely people with information who could come forward if they had sufficient incentive, whether financial or avoiding criminal charges.

    Well done Carlex!!

    • Why don’t you pass this to Private Eye as well? They are quite forensic at digging deep on these type of scams.

      Good luck in your endeavours.

  2. A Reviewer says:

    Guys

    They MUST include the electricity pricing scandal where peverel submit bills for payment at one rate and pay some 40% less and fail to declare the arrangement.

    Full details were on the ttas site – but i can dig them out again.

    The defence was bogus, and the lawyer who “set it all up” through the property managers association for scotland has now departed – ran when the stable door was actually still just open.

    happy chasing

    • A Reviewer
      Thank you for the information regarding the electric scandal, how can we find more what was done in our name by Peverel Managing Services Ltd who are our Managing Agents and our Landlord. Are there any more doggy workings that we should be aware of.
      Again thank you.
      Chas

      Also Karen I see what you mean if the D/D is for an amount higher than the usage how do they do this when we are not aware. Has any person, knowledge of any Telephone Costs Scams as we pay £612.00 a year without a single call being made, this includes:

      Line Rental for House Managers Phone Line 23.50 + VAT
      Warden call Line 12.00 + VAT
      Insurance for 2 Lines for priority repairs 7.00 + VAT
      This amounts to £42.50 times 20% VAT = £51.00 a month times 12 = £612.00

      Our House Manager abused the House Phone for 18 moths beginning the day she moved in at the very end of December 2010 until she left after being sacked in October 2012. We waited until July 2013 before £1,126.00 was refunded, Peverel refused to pay any interest on any of the refunds we received totaling £3,600.00.
      I asked for a review of the costs earlier in the year when I met our Area Manager, still waiting?

      With so many unanswered questions the Head of Customer Relations C. O. has finally asked if I will meet his Senior Managers which I have agreed, but alas no date has been given. We are to meet the A M in early August for the Budget Meeting but we never learn much from these meetings. I have asked for some one from accounts to be present to explain the Trial Balance/Audit Trail, we are not holding our breadth.
      Chas

  3. Another little trick that is used by managing agents is to pay for electric on direct debit as a standard charge every month, this is not based on usage but purely on a fixed rate payment every month/quarter.

    This is a nice little earner, as it is building a surplus of funds to the electric company. Then when the site managing agents change hands as they do tend to every 2 to 3 years to another company in their group!!!! any SURPLUS funds that have been paid by the out going managing agents is refunded back to the O/G agents but only after the new managing agents have taken over, so no repayments/rebates ever have to show in the accounts of the OG agents as this goes straight into to the ‘parent’ company of the old managing agents!!

    Getting the picture?……….. I do hope everyone does as this is yet another little scam…..

  4. Chas
    When you have your meeting it is very important to have someone with you that understands what you are paying for and what is being provided within those costs. I am happy to help out with any pertinent questions.

  5. Service charges in question? see:

    http://www.lease-advice.org/information/faqs/faq.asp?item=29

    Want to see how annual accounts for a block are arrived at:

    Rights to further information (inspecting accounts and receipts)

    As well as receiving the summary, the leaseholder has the right under section 22 of the Landlord and Tenant Act 1985 to inspect documents relating to his service charge as a follow-up to provide more detail on the summary. Within a period of six months from receipt of the summary, the service charge payer (or the secretary of a recognized tenants’ association) may write to the landlord requiring him to allow access to and inspection of the accounts, receipts and any other documents relevant to the service charge information in the summary and to provide facilities for them to be copied.

    Facilities for inspection must be provided within one month of the request, and must be available for a period of two months.

    There are further rights of investigation of service charges and management provided by the right to a management audit under the Leasehold Reform Act 1993 and the right to appoint a surveyor under the Housing Act 1996. Full details of those rights are set out in our leaflet ‘Appointment of a Surveyor, Management Audits’.

    Failure to provide a summary or allow access to further information

    Where a landlord fails without reasonable excuse to comply with either a request for a summary or to inspect supporting documents they commit a summary offence on conviction and are liable for a fine of up to £2,500 (level 4 on the standard scale). The local housing authority has the power to bring proceedings, or they can be brought by the leaseholder. Local authorities are exempt from prosecution.

    The old adage is: If you don’t ask you don’t get…… and ‘They’ rely on lethargy………….

  6. Michael Epstein says:

    Karen,
    I am sure you will agree that when residents put Peverel held service charge accounts under any kind of scrutiny, in virtually every case an “administrative error” is discovered in favour of Peverel.
    These “administrative errors” range from genuine mistakes, poor processes deliberate schemes designed to enhance Peverel earnings to fraud as evidenced by the price fixing scandal.
    It should be noted that service charges can only be recovered if supported by an invoice.
    If a development has been charged £500 to change a bulb, Peverel have to produce the £500 invoice.
    If they cannot, the development is not liable.
    Before lethargy, Peverel rely on ignorance followed by secrecy.
    Every single development should demand access to supporting documents.
    Leaseholders should understand, however unfair leasehold is, they do have rights and they must exercise those rights.
    Having researched the methods of Peverel for many years, i can tell leaseholders, that though Peverel may insist on a confidentiality clause when subjected to scrutiny i have yet to come across any development that has not had a considerable amount refunded.

    • “Before lethargy, Peverel rely on ignorance followed by secrecy.”

      Yes, in January this year I emailed [EDIT …] asking for copies of his notice on the board notifying leaseholders of the two companies Incom and Cirrus, from which he had obtained two estimates for a new door entry system and smoke alarms contract, but my request was refused on the spurious grounds they are protected by the 1998 DPA? My understanding is that the legislation only covers public bodies – health, education and local authorities records. [EDIT …] did eventually put some carefully worded information on the board relating to the two contracts but it was placed deliberately behind glass inside a locked notice board to prevent photocopying that information. The reason for Peverel’s obvious desperation not to allow any leaseholder access to such information must surely be to hide the truth and cover-up hard evidence of the price fixing as, unsurprisingly, Cirrus got the contract.

      Karen is right that leaseholders have a legal right to copies of all these documents but Peverel consistently lie to leaseholders and in breach of the Landlord & Tenant Act.

      • Fleeced
        Do what others have done and use your phone or camera and down load them to computer.
        Then contact your MA and inform them that you know your rights, they should be in the Expenses File which you have the right to see. Can you inform Sebastian and he will give you my phone number.
        Chas

  7. OMhostage says:

    A favourite administrative error of the careless and corrupt is accidentally charging twice for things at the end of the year, once before the year end, once after.

    Another is accidentally charging things to the wrong development. It’s an easy mistake to make when it is designed to be easy.

    The real art, however, is dreaming up clever wheezes that cost small amounts and then applying at scale. Consider the Cirrus out of hours service for example. That was snuck onto the service charges of developments with no communication to anyone as far I know. Needless to say it was never used and those who discovered it and challenged it found, lo and behold, that it’s negotiable.

  8. Lesley Newnham says:

    Once again Carlex well done and thank you for continuing to look for ways to end this abuse that is leasehold!

    I wonder will the fact that Peverel “admitted the price fixing involving Cirrus” be grounds enough for them to be expelled from ARMA? Perhaps you could ask that question at your meeting on Tues.

    Karen
    I know everything you say regarding our rights under section 21/ 22 summary information is correct BUT we did ask and still didn’t get!
    In fact we are still waiting 3 years on for correct handover accounts after going RTM.

    Prior to our taking over we had been charged for other developments, had been threatened with disconnection by the electricity company because bills had not been paid for 2 years and after taking over we were sent more red electricity bills along with other invoices that had not been paid. We refused to pay these without any accounts as proof and sometime later received threatening letters from a solicitor with added charges. We sent them all the correspondence previously entered into with our landlord and managing agent and since then have heard nothing.

    I find it totally unacceptable that any landlord or managing agent can continue to get away with this behaviour while telling us all how wonderful they are!!

    We were not managed by Peverel but the agent we had is still a leading member of ARMA and now intends moving into the retirement sector according to their website.

  9. Michael Epstein says:

    Omhostage,
    You are right to point out that Cirrus are open to negotiation when challenged.
    I wonder if you were aware that the same applies to Careline?
    In fact Careline are so amenable to negotiation i have had cases reported to me where they offered substantial discounts to offset money owed for excessive Kingsborough insurance commission claims.
    Lesley Newnham,
    If you are not satisfied by the response of ARMA, you can take your complaint to ARHM,.
    They will investigate any complaint with the vigour and integrity that you would expect from a body that has Mr Keith Edgar on the complaints committee!

  10. Michael

    I would urge anyone that has an issue over service charges to write to their managing agents requesting an appoinment to visit and scritinize the accounts as I am sure you would do the same.

    If this request is refused or ignored then I would go down this route:

    http://www.legislation.gov.uk/ukpga/1985/70/section/25

    This would be sure to get them twitching….

    Lesley

    Once you obtained your RTM then all bills or unpaid invoices arethe responsibility of the out going managing agents…. If the leaseholders have been paying the service charge and that service charge money has been mis spent (which is usually what happens when they know the games up) then that is their problem as it is the OG managing agents name on the bills and contracts…

    The new RTM has got no responsibilties for that debt unless they accept that responsibility on hand over and lets face it who would?

  11. Michael Epstein says:

    Karen,
    What you say raises a very interesting prospect. If any development requests an opportunity to scrutinise their accounts, this must be allowed. Failure to comply will result in a level 4 fine.
    In order to comply and to avoid fines (it would not look to good in the midst of an OFT investigation if an “innocent company” were to receive dozens of statutory fines) Peverel would have to allow the inspection of the accounts. The problem they then have is that if any item paid from the service charges for which there is no supporting invoice becomes the liability of Peverel, not the service charge account.
    [EDIT ..] Either Peverel will face the statutory fines, or face repaying funds into service charge accounts.
    You are once again right that unpaid bills remain the responsibility of outgoing managing agents.
    Do you agree that this responsibility also applies to the collection of service charges?

    • Michael

      Yes, you are correct and for those that do not quite understand how it works –

      Once a RTM Co has a date to take over the management of their block they have 2 options:

      The RTM Co can take over the cash credits in the service account (yes, I know what you are all thinking and you would be correct as there never is any credit at the point!…) the RTM Co would also take on any existing contracts for cleaning, electric and outstanding debts! and a copy of the accounts to date from the old MA would be handed over including a list of any outstanding debts that their fellow leaseholders owe.

      OR

      The RTM Co can start a fresh and start a new electric and water contract in the RTM Co name for the communal parts but they will also not be able to chase for any unpaid debts as they stay with the old agent to collect.
      In 99.9% of cases they will not receive a copy of any accounts either as the outgoing MA will always use stalling techniques so that they do not have to ‘explain’ who has been paid for what….

      Our own personel preference was to opt for the latter as it was just easier to get rid of them and start with a clean slate.

      Many leaseholders think that once RTM has been acheived, they can stop paying the old MA the management fees but this is untrue, it still needs paying until the last day that the outgoing MA contract ends.

  12. Omhostage says:

    Lesley,

    Why not name your former managing agent? Surely you hardly want to see Peverel customers jump out of the frying pan and into the fire?!

    Luckily for Peverel most of its “customers” are closer to hostages than people who can take their business elsewhere when ripped off — e.g., when their reserves are targeted for unnecessary spending with the business guaranteed to go to affiliated companies.

  13. Michael Epstein says:

    Karen,
    Thank you for your very clear explanation.
    Just so i am absolutely sure i understand what you are saying let us assume i owe Peverel £2000 in service charges at the time a new RTM company takes over. I will not myself owe £2000 to the new RTM company, that money is still owed to Peverel. Therefore it is still the responsibility of Peverel to collect any outstanding amounts from me.Of course Peverel would be entitled to recover any costs incurred in recovering money owed by me, but is it not the case that any money they do get must be passed to the new RTM company?
    Since there appears little incentive for Peverel to collect arrears (the law doesn’t seem to be much of an incentive) is there not a great temptation to simply deduct arrears from the reserve?
    I note that in reference to collecting arrears of service charges after a transfer of management, peverel have stated they will send collection demand letters but will not institute legal proceedings.

    • OMhostage says:

      Please note that Peverel’s looting of reserves (helping themselves to the money of other leaseholders to pay the service charges of defaulters) is not something done only at handover to a new managing agent.

      • Yes, we have had first hand experience of this…. like a child in sweet shop with too much pocket money…. they (MA’s) can not resist the temptation to spend, spend, spend….

      • OMhostage,
        Please explain how Peverel (which Peverel) whilst I have no love for Peverel I think it is time to be precise at which Peverel is being talking about. when we, as I have done just state Peverel is no longer helping the cause. Peverel have some good folks that work for them and it is only fair for us to state which Company.

        I was aware that Consensus Business Group (CBG) known as Peverel Group was put into Administration on the 14/03/11.
        Our Managing Agents are Peverel Managing Services Limited (PMSL)

        What we do not know about the Administration -:

        1. Why was the Group (CBG) put into Administration?
        2. Who benefited from the Administration?
        2. Who was in charge at the time of the CBG when it was put into Administration?
        3. What was the benefit for CBG and Peverel in general whilst in Administration?
        4. What happened to the people in charge of CBG after the Administration?
        5. Who if any are still working for Peverel Services Ltd, our Landlords?
        5. How did Peverel Services Limited (PSL) benefit from the purchase by Chamonix and Electra (C&E)?
        6. Our development was not affected as some developments were exempt, why?
        7. Why were some developments not part of the sale to C&E?
        8. What were the Administrators doing, when we were left in the same position as before?
        9. PSML our Landlord and Managing Agents have admitted that we are still Peverel owned?

        My experience has been with Peverel Management Services Ltd who have been our Managing Agents from the time I purchased my flat in 2006.
        Having said that which Peverel Company is the one that has been involved since 2005 to 2009 when it was seen to own up to Price Fixing with Cirrus and three other companies. We have been informed that Peverel handed themselves in to the OFT.
        Who handed themselves in to OFT do we have a name and a precise date?
        Chas

        • Chas

          Is Right To Manage (RTM) or Enfranchisement an option for your development?

          • Karen
            YES but we need time as we have outstanding complaints that we are close to resolving, but what help can you offer. Sebastian has my phone number and he can supply this to you.
            Chas

  14. Michael

    Correct, you do not owe the new RTM Co any money UNLESS they have agreed to take on all the debts and liabilities in which case that will include any overdue service charge payments, you would need to confirm what those arrangements were with the new RTM Co/MA.

    It would still be the responsibility of for example Peverel or a MA unless they have stipulated in an agreement with the new managing agents and asked them to collect it for them or they could put it in the hands of debt collectors/solicitors.

    Any money Peverel/old MA get will have been due prior to the handover date and as such, will still go to the old MA as they will still have outstanding invoices to pay.

    If a reserve/sinking fund has a credit then any money owed could in theory be deducted from that fund, although that would not be fair to the owners that have paid all their service charges when due.
    To my knowledge I do not know of any MA that has handed over a sinking fund!!! as by the time all the invoices are received it miraculously disappears into the abiss…

  15. Could someone give me any details of the electricity scam mentioned on this site by A Reviewer on July 27th. The block I am concerned about, which is Peverel managed, has very high electricity bills for the communal area – estimated to be two thirds more than a similar sized nearby development which not managed by Peverel. I am not sure how a managing agent could do this, and would appreciate an insight. Thanks.

    • Lesley Newnham says:

      Alex

      Please see article on Bungs ‘R’ Us on the LKP site. As Karen says if you put electric in the search box it will bring up other related articles.

      I am still looking for answers on this one as well!!

  16. Alex

    I think my comments on this thread : ‘Karen July 27th’ says it all but please message back the bits you are not clear on.

    Also if you do a search under electric in the search box on the LKP site it will bring you to:
    http://www.carlex.org.uk/managing-agents-offered-incentives-up-to-250000-to-place-gas-and-electricity-contracts-spending-your-money/

    Karen

  17. Michael Epstein says:

    Alex,
    You should also check that the communal electricity meter is being read and that your bills are not estimated. You should also ensure that you are not paying estimated amounts in advance..
    It has been known for Peverel to lump electricity charges for individual developments together and obtain a bulk user discount from the power company. As you might expect from a company that is cooperating with a price fixing investigation any discount is kept by them.