Racing for a fall...
Failed funeral boss’s high-speed jaunt at Silverstone – just days before his firm collapsed leaving 47,000 pensioners out of pocket
INDULGING his passion for motorsport, Richard Wells roared gleefully around the Silverstone track until he spun off, ending his race abruptly.
Just 11 days later on March 23, his funeral plan firm Safe Hands suffered a similar fate when it collapsed and called in administrators.
The Silverstone spin may have dented cocksure Wells’s pride, but the failure of Safe Hands has left 47,000 customers – many of them elderly or vulnerable – facing financial losses running into thousands of pounds.
Gloomily, the administrator FRP admitted last week it had recovered only £3.7 million in cash of the £65million that should have been ring-fenced in an independently run trust fund to cover the cost of funerals. FRP fears it may never recover anything like the full amount.
Over recent weeks, The Mail on Sunday’s Personal Finance Editor Jeff Prestridge has revealed how the staggering absence of regulation in the pre-paid funeral industry allowed successive owners of Safe Hands to divert money from the trust fund, much of it into offshore accounts. Ironically, the
‘Funds used to make high-risk investments’
How greedy funerals firm skimmed cash from customer fund – and enriched bosses
firm’s demise appears to have been triggered when the Financial Conduct Authority (FCA) announced it would finally begin overseeing such firms from this July.
Safe Hands withdrew its application to be accredited by the regulator in February when it became clear that it would not meet the required standards. It collapsed the following month.
Now an investigation by the MoS has unearthed more astonishing details of how the company has operated over more than a decade.
Established in 2010 by father and son Peter and Sean Cavanagh, company accounts show money from the trust fund was being diverted into paying bonuses to them and an associate as early as 2014.
As it sought to expand, Safe Hands secured the endorsements of TV GP Dr Hilary Jones and the late World Cup winning goalie Gordon Banks, but it also launched an audacious plot against its rivals. Posing as independent financial advisers seeking new business, some of its salesmen secretly recorded representatives of other firms making derogatory comments about Safe Hands at a meeting.
Lawyers for the Yorkshire firm sent transcripts of the comments to its rivals and sued them for ‘vicious, unprovoked, verbal attacks’ that it claimed were ‘a desperate and shamefully unprofessional effort to get an edge over the competition’.
However, the case collapsed when the ruse was exposed, leaving Safe Hands with a six-figure bill for legal costs. The court saga in 2016 also revealed how the National Federation of Funeral Directors (NFFD), which had endorsed the firm and was presented as an independent body, was actually one of Safe Hands’s sister companies and had the same owners.
The Cavanaghs did not respond to repeated requests for comment, but analysis of accounts show that sums from the trust fund when they were in charge were loaned to SHFT Properties, another firm controlled by Safe Hands, which was then used to buy at least five commercial properties worth £1.7 million. Although a trust is permitted to make such investments, this should be done with the interests of plan holders at its core.
In 2018 alone, a further £2million was moved from the trust fund and paid into the company coffers before being handed out in dividends to shareholders.
Wells, 35, bought Safe Hands in February 2020 through his private equity firm SHP Capital Holdings and soon replaced the independent trustees of the fund with an outside firm whose chief executive was a former business partner.
A director of 19 companies and a former boss of eight, including several that have collapsed, Wells has an affluent lifestyle, owning two large houses in the West Midlands, each worth about £1.2 million.
One six-bedroom mansion in Staffordshire has a lake and is set in five acres. A Range Rover and Bentley with personalised number plates were parked there last week.
Wells competes in the Praga Cup, a six-stage supercar competition in which rich enthusiasts team up with professional drivers. Wells and his partner Alex Kapadia are in fourth place, and the businessman is planning his next race at Snetterton in Norfolk on May 14 and 15.
Safe Hands customers are, by contrast, digesting dire news. FRP admitted tracing money siphoned from the trust fund was proving ‘difficult and time-consuming’, adding: ‘A significant proportion of the funds appears to have been used to make illiquid, high-risk investments, many of which are based in offshore jurisdictions.’
Last night, Wells said: ‘It is with deep and sincere regret that Safe
‘Firms such as Safe Hands are unregulated’
Hands is in this position. The company was acquired in good faith to provide funeral plans in what was an expanding sector. Due to the economic effects of Covid and other business pressures the decision was taken for the company to be placed into administration to ensure the best outcome for plan holders.’
Dr Jones did not respond to a request for comment, but there is no suggestion he or Mr Banks knew of or were involved in any impropriety. FRP declined to comment.
An FCA spokesman said: ‘The Government changed the law to bring pre-paid funeral plans under our regulation from the end of July 2022. Until then, firms such as Safe Hands are unregulated and we have limited powers.’
ADMINISTRATORS appointed to look into the demise of failed funeral plans provider Safe Hands Plans have put customers on alert that they are unlikely to get back much of their money. It means there is now a strong likelihood that the 47,000 customers of the Wakefieldbased company will be left with near worthless plans that cost them on average around £3,000. Customers were told the plans would cover the cost of their funeral when they died.
But documents seen by The Mail on Sunday show the administrators FRP have managed to take control of less than £4 million so far, leaving more than £60 million of customers’ money outstanding. There are now major question marks over whether this remaining money can be retrieved.
This is the stark prospect facing planholders this weekend as administrators at FRP Advisory assess the parlous state of Safe Hands’ finances. FRP was appointed in late March after Safe Hands suddenly withdrew its application to become an authorised seller of funeral plans under a new regulatory regime overseen by the Financial Conhave duct Authority. It was forced to stop selling plans, triggering its fall into administration.
The main focus of the work being undertaken by FRP centres on the
Safe Hands Plans Trust where customers’ payments were paid into – and then invested. Such a fund is meant to safeguard customers’ money with independent trustees ensuring assets are not misappropriated – and are ring-fenced from the business assets of the funeral plan provider. Prior to FRP’s appointment as administrators, the trust was overseen by Sterling
Trust Corporation, based in Weston-super-Mare, Somerset.
In the latest customer update, a document seen by the MoS, FRP confirms – as we have previously reported – that there is a shortfall between the value of assets held in the trust and the future cost of paying
How greedy funerals firm skimmed cash from customer fund – and enriched bosses
for all the funerals people have purchased. In other words, there is not enough in the pot to meet the promises made to customers.
But far more worryingly, FRP indicates that the vast majority of the trust’s assets are overvalued. Even worse, it raises concerns that some of them may not be owned by the trust, but by other parties. If proven, this would constitute fraudulent use of trust assets.
FRP has so far managed to take control of just £3.8million of assets which were held in liquid investments such as blue-chip UK shares. But the bulk of trust assets – more than £60million – are in ‘illiquid, high-risk investments’, many based in offshore jurisdictions.
These assets were managed by two companies. The first was TJM Partnership, which also traded for a while under the name of Neovision Global Capital. It was put into liquidation earlier this year. The other fund manager, FRP says, is based in Mauritius, more than 6,300 miles from the UK.
The administrators warn that the amount they will get from disposing of these assets will be ‘materially lower’ than £60million. On the issue of ownership of trust assets, it says it is looking at who is entitled to them, adding that it has the right to issue legal claims if they been misused. In other words, it is unsure whether all the assets attributed to the trust belong to it.
Concerns about the trust fund were highlighted in an independent report undertaken by Bury-based Zenith Actuarial earlier this year.
Its report, obtained last month by the MoS, raises numerous red flags over the investment funds held – their ‘potential lack of liquidity, specialist focus, high charges and potential issues relating to disinvesting’. It also noted that the funds were mostly based in the Cayman Islands.
Customers of Safe Hands are alarmed about FRP’s latest missive on the state of the trust. Among them is John Salisbury, a retired engineer from Stockport, Greater Manchester. He bought two plans – one for him and one for his wife Dale – in late 2019 after seeing a local solicitor. In total, he paid £7,000. ‘We thought we were doing the right thing,’ says John, aged 67. ‘Dale had just decided to retire after being made redundant from a national retailer. So we felt it was a good time to sort out our finances. We got our wills in good order and took out Safe Hands funeral plans.’
He adds: ‘It seemed like a good idea. The literature told us our money would go into a secure ringfenced trust that would be operated independently from the business. But now, it looks like we could lose all the money we handed over. The latest report from FRP makes for depressing reading.’
Like many customers, he contacted his local MP to complain about what has happened, but the response was disappointing. John says: ‘All the MP wrote about was the future regulation of the funeral plans market. That’s no good for me and Dale. Our money has already gone up in smoke.’
The MoS has led the way on exposing poor practice at Safe Hands. Last month, we reported on the company taking annual surpluses from the trust to pay dividends to directors. We also revealed trust fund money being borrowed to fund the purchase of commercial property.
Last week, we sought the views of those involved with Safe Hands before it went into administration. Kylie Simmonds-Cox, chief executive of Sterling Trust Corporation, was asked (by both phone and email) to comment on its oversight of Safe Hands Plans Trust. She did not respond. Sterling is a member of The Association of Corporate Trustees, which said it was not investigating the company.
On Friday Scott Robinson, chief executive of Zenith Actuarial, told The Mail on Sunday: ‘We understand how distressing this situation must be for customers of Safe Hands Plans. However, the report we did, in which we highlighted a number of serious issues, is confidential.’
We attempted to contact TJM and Neovision Global Capital. No comment was provided.
Eight days ago, Richard Wells, owner of Safe Hands at the time of administration, told us: ‘It is with sincere regret that Safe Hands Plans is in this position. The company was acquired in good faith to provide funeral plans in what was an expanding sector.’ No comment was offered on the health of the trust.
‘Our money has already gone up in smoke’