June 28, 2017

Regulator to rule on whether scandal-hit Peverel / FirstPort Retirement is fit to be a member of ARMA

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FirstPort Retirement, formerly Peverel, should not be admitted to ARMA because it has an unaccounted-for portfolio of house managers’ flats and has a track record of misleading residents when trying to sell them.

These were the arguments put on Monday to Keith Hill, a former New Labour housing minister, who is the regulator of ARMA (the Association of Residential Managing Agents).

In addition, it was argued that middle managers at FirstPort are remunerated with commissions for achieving the sales of these flats.

Therefore, they have every incentive to end the live-in house manager service that for many was one of the main attractions of the complex. The provision of in-house managers, and the upkeep of their flats, is written into many residents’ leases.

The regulator, who sits with a panel, was told of four sites where Peverel / FirstPort staff have wrongly informed residents that the house managers’ flats belonged to the freehold owning company, ultimately part of the offshore Tchenguiz Family Trust which is assumed to be for the benefit of Vincent Tchenquiz.

In fact, the flats turned out to be owned by Peverel / FirstPort.

In all cases, the flats had leases issued to them in 2009, when the Tchenguiz interests owned both the freeholds and Peverel.

The complaint to ARMA’s regulator is the latest in a series to various authorities made by Alex Ellison, whose mother lives at Mere Court, in Knutsford, Cheshire.

“ARMA should not give this company accreditation,” she told the tribunal.

“The purpose of ARMA is to reassure customers that any member of ARMA is respectable and trustworthy and can be contracted to manage with confidence.

“Would it not undermine ARMA to admit a company that hides behind a veneer of respectability and trustworthiness?

“Would it also not undermine the confidence of the many trusted members of ARMA who would find themselves accredited alongside this company?”

In July 2014 Mrs Ellison complained on similar grounds to the ARHM (Association of Retirement House Managers), which is principally funded by Peverel / FirstPort.

It ruled that Peverel – which decided to rebrand itself FirstPort in September 2014 – could have improved its communications with residents. “However, on balance, we do not find that there is overwhelming evidence to suggest that Peverel were driving the option of a non-residential position to any extent, or to prejudice residents during the consultation and ballot process.” More here

Mrs Ellison’s complaint to the ARMA regulator is more important as it is the first time that Peverel / FirstPorts unaccounted for portfolio of house managers’ flats has been scrutinised by an independent authority.

The case is curious as it concerns the application of FirstPort Retirement to join ARMA, rather than a complaint about an existing member of the trade body.

The seriousness of the issue was underlined by the presence of FirstPort chief executive Nigel Howell as well as the company’s head of legal Russell Tillison.

Mrs Ellison told the panel: “I accept the matter of the purported legal ownership of the various house manager’s flat is a matter which will have to be settled in the courts and that many of the arguments related to this ownership sit outside the jurisdiction of the ARMA panel.

“The issue of concern I put before you today follows on from the fundamental conflict of interest which results in this claimed ownership and the breaches of the ARMA-Q code that apply in relation to this matter.”

Mrs Ellison provided ARMA with five letters and notices from Peverel that informed residents at both Mere Court and Ash Court in Cheshire that the house managers’ flats belonged to the freeholder – ultimately the Tchenguiz Family Trust – whereas, in fact, they belonged to Peverel.

Peverel acknowledged that it had misinformed the residents.

Mrs Ellison added: “On 28 July 2015 Sebastian O’Kelly [of Carlex / LKP] wrote to Nigel Howell, with copies to Brandon Lewis, Peter Bottomley, Jim Fitzpatrick and Keith Hill, informing them that the residents at Sondes Farm in Dorking had been urged to surrender their interest in the HM flat in exchange for £15,000 and again the residents had been wrongly informed that the flat belonged to the freeholder (still Mr Tchenguiz or interests he controls).

“Also in that same letter it reported that residents at Homecombe House in Devon had also been wrongly told that the house manager’s flat there belonged to the freeholder, not FirstPort.”

Neither of these cases has been reported on Carlex: the house manager’s flat at Sondes Farm, a complex of 35 cottages and flats built in the late 1980s, was valued by FirstPort executives at £320,000.

The residents voted against the move to a visiting house manager.

At Homecombe House the house manager’s flat was valued at £58,000. Its proposed sale was deemed “flawed” by FirstPort and withdrawn.

These issues will be addressed in a separate report on Carlex.

Mrs Ellison further claimed that the sale of the house managers’ flats would have resulted in commissions paid to the regional and area managers. This was confirmed to her in correspondence from Peverel / FirstPort on June 30 2015.

“This breaches the ARMA-Q Customer Charter as a direct conflict of interest,” she claimed.

She added: “The incentive of a commission for FirstPort staff and profit for the company was inevitably likely to result in a biased representation of the advice given to leaseholders in breach of the ARMA Consumer Charter requiring action to be fair.

“I believe there is sufficient evidence to show that FirstPort continue to show no genuine intention of meeting the objectives of ARMA-Q.”

While the regulator’s ruling will be public, the hearing was not. As a result, we do not know what FirstPort Retirement’s counter argument was at this stage.

Separate to the case, on July 31 last year Nigel Howard explained to Sebastian O’Kelly why FirstPort was seeking membership of the trade body:

“Regarding ARMA membership, we believe the Association is very sound and like the way that ARMA-Q accreditation sets a good standard in the sector.

“The two larger parts of FirstPort (that address the non-retirement sector) are already ARMA members and both are ARMA-Q accredited.

“We therefore decided earlier this year to also apply for ARMA membership for Retirement and, if approved, we would then seek ARMA-Q accreditation for that business too.

“I am aware that in making its normal evaluation of new membership applications ARMA have received three objections to our membership relating to Development Manager Flat sales, the OFT investigation into a different group company [the Cirrus price-fixing scandal here], and misallocated payments from an Ormskirk retirement site made over the past twelve years and now corrected reported on Carlex here.

“Whilst we feel these old issues have been fully aired in the past, we also understand that the ARMA regulator should review them carefully before deciding whether to accept our application and we are happy to go through this further independent scrutiny.”

Carlex / LKP will report the ARMA regulator’s ruling when it is available.

COMMENT

Alex Ellison deserves huge credit for persisting with this complaint. She has done so for no financial gain, but as a concerned citizen.

She believes that vulnerable pensioners have been on the receiving end of corporate financial engineering, where huge profits have been mined out of residential freeholds.

At one point Vincent Tchenguiz boasted of owning one per cent of the residential freeholds in the UK.

But by breaking up the assets, over-valuing the fragments, obtaining gearing from banks – which taxpayers are still bailing out – Tchenguiz became one of the most important corporate players in the UK.

Before the crash in 2008, he and his brother Robert were bidding for the Sainsburys supermarket chain.

During the recession, the house of cards came crashing down, and in March 2011 the brothers were arrested by the Serious Fraud Office in a botched investigation. They won a judicial review into their wrongful arrest.

The police investigation prompted the banks to put Peverel into administration, from which it was rescued by venture capitalists Electra and Chamonix, with a loan secured against its property assets, including the house managers’ flats.

In almost all cases, these flats have leases created in 2009, even though the retirement flats were built years before.

What is unexplained is why Peverel / FirstPort ended up owning these flats. If they are a communal asset of a retirement site, as many legal authorities believe, should they not be handed back?

Should banks be lending to the company on the security of assets such as these?

At the very least, Peverel / FirstPort should make clear to the ARMA regulator – and to the wider public, for that matter – its legal opinion why it is right that the company owns these assets.

This is not a matter that is going to fade away, and in time it will unravel. The argument of the chief executive of FirstPort that these issues are “historic” is feeble.

This week Carlex was contacted by residents at Crown House in Melksham, Wiltshire. Built in 1988, a lease mysteriously appeared for the house manager’s flat in 2009; a year later the flat was sold.

But Peverel spent the residents’ contingency fund, it is claimed, to pay for new windows at the flat before the sale. Now they want £4,000 back. Carlex will shortly raise this issue with FirstPort.

Then there are other issues that may concern the ARMA regulator.

For example, the Office of Fair Trading’s finding of collusive tendering by Peverel’s subsidiary Cirrus in December 2013.

For five years the company was systematically ripping off pensioners at retirement sites managed by Peverel Retirement.

Those in ARMA with longer memories will recall the residential side of Peverel being fined the then maximum £2,500 in 2010 for failures in their accounting and management practices.

Peverel had to undertake an independent audit of its systems, and its then CEO had to write to every ARMA managing agent apologising for the company’s behaviour.

Under the circumstances, the ARMA regulator may well conclude that Peverel / FirstPort Retirement is altogether too complicated a prospect to be admitted to membership of the trade body.

Comments

  1. “When if ever, will FirstPort Retirement be fit to be a member of ARMA”

    Chas Says:

    Only when the Senior Managers/Directors own up to the many scams that have been undertaken where we as pensioners have been systematically robbed of Service Charges by those in a position of power at Peverel from 2005 to date?

    A recent posting on About Peverel shows that those who tried to prevent these scams were threatened with the sack.

    • Michael Epstein says:

      It is to be hoped that as ARMA agonise over their decision to admit Firstport Retirement they give proper consideration to ALL the issues concerning this company, which extend far beyond the house Manager flat controversy.
      It is to be hoped that proper time is accorded to all those wishing to present their concerns over the conduct of Firstport Retirement to ARMA.
      It is to be hoped that ARMA take note that Firstport Retirement actions have impacted the elderly, infirm and most vulnerable members of society.
      I trust ARMA will also take note of Firstport being a Gold Sponsor for the RESI conference at Celtic Manor, Cardiff in September. This would have been very expensive for a heavily in debt company who at the very least have still to pay back all the residents cheated in the price fixing fraud.
      Instead of sponsoring the RESI conference, that money should have been used to repay the residents.

    • Firstport and ARMA

      I wonder if ARMA is aware of the tangled web that is Firstport Retirement and how a Dormant Company can collect Ground Rent?

      Firstport Retirement Properties Services Ltd (FRPSL) were previously, Peverel Management Services Ltd (PMSL) (Company Number 01614866) trading as Peverel Retirement, our Managing Agent that traded as both Peverel Retirement and now as Firstport Retirement?

      PMSL/FRPSL were appointed by our Landlord, Meridian Retirement Housing Services Ltd (1986) which is also a Peverel Services Ltd company.

      Meridian Retirement Housing Services Ltd is shown as a Dormant Company, Non-Trading and has a worth of £100?

      Firstport Retirement Service/Management Charges at Ashbrook Court are collected on behalf of Meridian Retirement Housing Services Ltd, how does that work???

    • Michael Epstein says:

      It is not just the Peverel/Firstport who expose the truth to protect residents that are threatened.
      What about the residents themselves?
      Remember the case of the former WW2 Squadron Leader Eric Mathews? Look how he was treated by Peverel/Firstport?

  2. Chas recently emailed ARMA:-

    I note you agree over the past 13 months, we have exchanged several emails since 15/01/2015, you have again added that at present the Collusive Tendering Issues are still under review by the Independent Regulator and the Regulatory Panel.

    I thought you might be further interested in the Openness and Transparency shown by Peverel Retirement now Firstport Retirement.

    In 2013/14 the OFT, along with the Managing Director of the Peverel Group, stated in the Report into Collusive Tendering (Price Fixing). The MD of Peverel admitted to the OFT that Peverel Retirement and Cirrus Communications had colluded to the Tender Fixing at 65 Retirement Developments, from 2005 to 2009. The OFT and the Peverel Group MD agreed that Price Fixing, was likely to be the tip of the iceberg, and other developments would have been similarly treated. The OFT decided they were not prepared to undertake any further action as they had enough information?

    The Case Officer informed me, he did not see the point in taking further action as the Terms of Reference “Collusion” had been proven by the admission by the MD. Having stated this in the report and the fact, amongst ARMA employees, are Senior Peverel Employers-Directors who should have been aware of these facts, including the other facts, not provided in the report.

  3. Michael Epstein says:

    If as Peverel/Firstport Retirement claim problems are of a historical nature, why have they had to declare a liability 4.5 million pounds to resolve legacy issues? Why does their trading statement make mention of “vigorously defending all claims?”
    And if their application to ARMA is on the basis of historical issues, than surely they believe those historical issues must be down to the previous management?
    That being the case, does that not call into question the ARMA membership of Freemont Property Managers, whose directors were the previous Peverel/Firstport management?
    If Peverel/Firstport Retirement are admitted, does ARMA not run a real risk if (and when) more Firstport scandals are revealed?
    And if Peverel/Firstport Retirement are not admitted how can the other Firstport companies remain members of ARMA?

    • As a retired leaseholder at Ashbrook Court in Shropshire, Peverel Retirement was our Managing Agent. I am indignant that Peverel Retirement/FirstPort be admitted to ARMA or ARMA-Q after they were found guilty of Collusive Tendering/Price Fixing at 65 Retirement Developments during a 5 year period from 2005 to 2009.
      Alex had stated that ARMAs purpose was to reassure customers that any member of ARMA is respectable and trustworthy and can be contracted to manage with confidence, does Peverel/Firstport fit into this category to Manage with Confidence?
      ARMA would undermine their own Organisation,if it admitted a company that admitted cheating elderly residents and now hide the facts that Historic Issues have been left behind, by the new breed of Manager who only want to “Move Forward” not showing any interest in the mess left by their predecessors.
      It would also undermine the confidence of many trusted members of ARMA, who would find themselves accredited in the same Organisation and start leaving. Peverel Retirement also refused to refund excessive commissions on the Development Building Insurance even when Peverel Group CEO Janet Entwistle agreed that they were excessive.

      • Is ARMA aware of the letter sent by Mr Peter Whalley regarding the uncertainty of selling HMF which was posted on Carlex? It seems to me that as there was only 5 Regional Managers (RM) at any one time surely they would have had Regional Meeting to discuss the Way Forward as these five Regional Managers looked after 50 Area Managers, and would have run the whole of England and Wales from at least 2007?

        Is it worth knowing which RM covered the Areas that the 4 developments, mentioned at the meeting, including any other development that considers they were Price Fixed?

    • Michael,
      I wonder if ARMA can explain why a shared House Manager, covering two developments, whose single Flat has had 3 different charges against it from the Royal Bank Of Scotland (RBS) that is 80% owned by us. Does this mean that 3 separate mortgages had been raised with the same bank for the one flat?

      As most of the Historic Issues would be those that the 4.5 million pounds had been set aside for, why are the Area/Regional Managers refusing to even consider these issues?

      You posted that the Historic Issues would have been happening whist four previous Directors at Peverel Retirement are now Directors at Freemont Property Management? I believe that Freemont Property Management are Associate Members of ARMA?

      Is this true???

      • Michael Epstein says:

        Yes Freemont Property Managers headed up by Nigel Bannister and Keith Edgar are associate members of ARMA. And they have recently expanded into the retirement development sector, encouraged by the support of the Tchenguiz Family Trust freeholding companies that own the freeholds of the older Mcarthy & Stone developments.
        Remember the Chinese proverb “May you live in interesting times”
        These will certainly prove interesting times for ARMA!
        Like buses, even if you have to wait for a Peverel/Firstport scandal to break, you can be sure two* will come along at the same time!
        * Please note the use of the figure “two” is not intended to imply that only two scandals are on the way!

        • Michael,
          When were Freemont Property Managers, headed by Nigel Bannister and Keith Edgar entitled to be an Associate Member? What was the criteria that allowed them to be a member.

          The latest scandal is the duplication of Operating Costs introduced sometime circa 2005/06 when the Price Fixing began. The simple example is the Training Costs for new Development Managers (DM) as each new DM is hired. The information that would show the Training Costs, are hidden in the Trial Balance/Audit Trail, not available with the Service Charge Budget, sent to each development 6 months after the end of the Financial Year.

          The Expenses File is available for each development to see is a legal requirement to be sent to each development when requested within I believe, 1 month of asking.

          The Operating Costs which are included in the Management Fees, is part of the information provided in literature form, produced by Peverel Management Services Ltd. This information is also available in the Welcome Packs that are included and paid for by the Service Charge Budget, Management Fees and then charged again as Exit Fees when you leave.

  4. Michael Hollands says:

    Well done Alex Ellison for giving this evidence to ARMA loud and clear.
    Of course they will already have been aware of these issues from Carlex and many people like myself.
    Maybe this time they will take notice.
    I first contacted them in September 2014 when the original Peverel applied for Q membership.
    For a long time I was ignored by ARMA, then I received some meaningless replies and now I am being ignored
    again. Although they have some top level Board members they seem to act in an unprofessional way and Leaseholders are not a priority with them. If at all.
    ARMA are now in a strong position to insist on First Port reforming and fully compensating for past deeds .
    is. Price Fixing, sale of Managers Flats, overcharging on Insurance and Power. etc,etc
    So ARMA get this sorted quick and do everyone a favour. You can succeed where the ARHM failed.
    And answer my E.mails p!ease.

  5. Michael Epstein says:

    If anyone from ARMA is reading this, according to posts on About Peverel, residents are being advised to upgrade fire alarms at developments all over the country. as is the nature of the manner in which Firstport Retirement operate and so reminiscent of the price fixing scandal it is Appello that is awarded the contract to upgrade the systems.
    ARMA, do you really want Firstport Retirement as a member?

  6. Appello was Cirrus Communications before the change of name and Andy Davey was head of Cirrus during the Price Fixing, he is now a Peverel/Firstport Director?
    Has ARMA anything to say?

    • Michael Hollands says:

      ARMA have had nothing to say for the past 18 months.
      They need a supremo who can get a grip of the situation, maybe their new CEO, (just been appointed), is the one to do it.
      But I won’t hold my breath.
      There is a lot of information on About Peverel which ARMA should be taking in, some of it good advice as to how they can get out of this stalemate.

  7. Michael Epstein says:

    The normal process for applying for ARMA accreditation allows for Associate status for two years for companies that have been declined accreditation, or for those companies that have been trading for less than two years.
    So it is highly irregular for ARMA to still be debating the possible membership of Firstport Retirement as even an associate member.
    Clearly, there are wider implications.
    How can Firstport Retirement not be accredited when other Firstport companies are, and how can Firstport Retirement not be accredited, yet senior Firstport managers also hold very senior positions within ARMA ?
    It is to be hoped that the new CEO of ARMA, Dr Nigel Glen, can sort this mess out,
    He comes to ARMA after becoming “surplus to requirements” at his old firm, Managed Living Partnerships after they were bought out by HML.

    • Michael Hollands says:

      Have a look at the Managed Living Partnerships website, Case Studies , Number 4.
      Maybe he will be able to get it sorted.

  8. Michael Epstein says:

    I wonder if the management companies that caused those problems are members of ARMA?