UK Acorn Finance (Mortgages)

Jonathan Edwards Excerpts

Tuesday 11th November 2014 Westminster Hall

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

It is a great pleasure, Mr Turner, to see you in the Chair and to serve under your able chairmanship.

I preface my comments by saying that, as a member of the legal profession, I am not given to making serious allegations about professional people; in fact, over the past 23 years, I might have done that twice, so I am not a serial offender in that regard. However, what I shall detail today is, to my way of thinking, one of the worst scandals that I have come across in all those years.

I am concerned about the Williams family—a farming family from Cwm Pennant, Garndolbenmaen, in my constituency. The husband inherited the farm in 1996 and subsequently transferred it into his name and that of his wife, with whom he had been working on the farm since 1980. In late 2009, they were introduced to Desmond Phillips of UK Acorn Finance Ltd by a Mr Peter Baskerville, a financial adviser. On 13 December 2010, a meeting was held at Mr Phillips’s office in Highbridge, Somerset; he then introduced them to a Mr Peter Williams, a solicitor who said that he would act for them. Their indebtedness at the time was approximately £650,000, of which £450,000 was owing to the Agricultural Mortgage Corporation plc at a favourable interest rate. After my constituents had made a complete financial disclosure, Mr Peter Williams, the solicitor, advised that he could not act for them after all as Mr Phillips was his client. That was curious.

On 13 January 2011, Mr and Mrs Williams had another meeting with Mr Phillips, again in Somerset. He introduced them to a Mr Thomas Brennan of Davies and Partners, solicitors. Mr Brennan said he would act for them; he was a close friend of Mr Peter Williams. After that meeting at Highbridge, a Mr Mark Sanders of Carver Knowles, on the instruction of Mr Desmond Phillips, valued the farm in north Wales at £2.2 million. Mr and Mrs Williams paid for that valuation. Mr Phillips then made numerous promises to them to provide additional funding, and on the basis of his promises they agreed to consolidate their borrowings with a mortgage advance from UK Acorn Finance Ltd. Initially, that was to be a short-term bridge for a few months, with the assurance that he—Mr Phillips—would thereafter transfer it to a cheaper lender. There were continual procrastination and delays from Phillips, and the transfer to a cheaper lender never happened. Instead, Mr and Mrs Williams had no choice other than a succession of massively expensive short-term bridging loans from UK Acorn Finance Ltd with no exit route other than the repossession of the farm.

On 22 April 2011, shortly after the charges on the farm were put in place in favour of the company, Mr Phillips and his daughter, Karen Phillips, visited the farm. Mr Phillips again promised additional funding, which never materialised. As a result, the farm was financially crippled, but Mr and Mrs Williams were assured that the mortgage would soon be transferred to a cheaper lender at 4% annual interest. That never happened—instead, they received notification shortly afterwards of repossession proceedings by UK Acorn Finance Ltd.

Mr and Mrs Williams were forced into a succession of short-term bridging loans of between three and six months with UK Acorn Finance Ltd, with enormous arrangement fees and interest costs resulting in a vicious spiral of unnecessary debt over which they had no control. Mr Phillips’s company was raking in all the money. UK Acorn Finance Ltd was owed in excess of £1.2 million with an increase of approximately £550,000 in two years. UK Acorn Finance Ltd has since repossessed the farm.

UK Acorn Finance Ltd always produced legal documentation for signing at the last minute and Mr and Mrs Williams signed it without legal representation or advice. The documents were sometimes driven up from Somerset to be signed and taken back there, Mr and Mrs Williams being told that time constraints made personal visits necessary to achieve the company’s deadlines.

Mr Phillips’s valuer subsequently reduced the value of the farm to £1.8 million. Mr and Mrs Williams were forced by Mr Phillips of UK Acorn Finance Ltd and his associates into enormous, spiralling mortgage debt. Peter Williams and his associate, the solicitor, knew from the outset that that would happen before their now obvious acts of conflict of interest—and, I believe, of conspiracy to defraud.

The true interest and cost of Mr Phillips’s actions have not been calculated, but they are clearly enormous. The reduction in the farm’s value from £2.2 million to £1.8 million, according to the valuer appointed by Mr Phillips—presumably to weaken the value ratio against the spiralling mortgage debt to UK Acorn Finance Ltd—and the manner in which the mortgage and financial affairs have been handled by Mr Phillips, his associates and lawyers, have clearly been reckless, if not, as I believe, fraudulent. Obviously, Mr and Mrs Williams’s credit rating is now in ruins.

In February 2011, Mr Phillips appointed a Mr N.R.C. Burd as the Law of Property Act 1925 receiver—by the way, Mr Burd appears quite often in such cases as the favoured receiver. Mr Peter Williams, then of solicitors Ebery Williams, acted for Mr Phillips, Mr Burd the receiver, Peter Baskerville and UK Acorn Farm Management Services Ltd, behind which stands Paul Johnson. My constituents were told by Mr Phillips that, although they had received no documentation from him, Williams’s company and solicitors had received £48,000. That was without their authority or consent. There were a few small, irregular payments to builders working on the farmhouse, who quickly withdrew their services because they were not being properly paid; Mr Phillips had given an assurance that he would make payments from money he held on their behalf. Mr Phillips has not accounted for a single penny. The total is believed to be in the region of £148,000, and none of that has been accounted for. The matter was reported to the police.

A Vivienne Williams, whose partner is Mr Peter Williams, the solicitor, now of Michelmores solicitors, previously of Burges Salmon, of Ebery Williams, of Wilsons Law and of Veale Wasbrough, still acts for Mr Phillips’s company, UK Acorn Finance Ltd and has succeeded in repossessing the farm and taking away Mr and Mrs Williams’s livelihood, their stock and their home. Everything they had on earth has gone.

Mr Peter Williams, of Burges Salmon and the various other establishments, does not stay long with a firm. I understand why. His normal modus operandi is one or all of the following in any particular case. The title deeds are split between the residential house and the land. There are separate mortgages on the house and the land and the property is then transferred into a limited company and mortgaged in the company’s name. The mortgage on the residential property then becomes a commercial transaction and is unregulated. All legal protection rights, including those of minor children, are removed by the above.

The house and land are then repossessed separately, devaluing in favour of purchasers who—believe it or not—are connected to the lender. On the way in, they value the property high to justify the payment of huge sums, which are clearly not sustainable and could not be paid back by the borrowers; on the way out, they undervalue it drastically, so that the person connected to the company can benefit.

The “business plan” in this case was prepared by Paul Johnson, who in reality was there to serve the key players: areas of weakness were exposed, particularly regarding cash flow, for exploitation by Peter Williams, Burges Salmon, UK Group and so on. As I said, a succession of short bridging loans in favour of UK Group was effected at a massive cost—an interest rate of 22%, at this time! Furthermore, fees of 9% were rolled up every six months, plus there were huge fees to solicitors and various agents. There was continual procrastination from them when it came to finding cheaper loans.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

My right hon. Friend is making a powerful case on his constituents’ behalf. In Talley in my constituency, there is a case that mirrors the structure of deception perpetrated against his constituents; it involves a company, associated with UK Acorn Finance, called UK Farm Finance Ltd. Does he share my concern that the farming community in particular is targeted and susceptible, because it is cash poor but asset rich? When the bridging loans mount up, people find that the position they are in quickly gets beyond their control.

[Mr Llwyd]

That is precisely the point. The farming community has been through a rather tortuous time in any event, in terms of income streams over the past five to seven years, so my hon. Friend’s point is absolutely correct. Farmers are more prone, but they are also in a worse position: unlike someone who loses a house and moves on, they lose absolutely everything. As I said, when they have inherited the property, as in Mr and Mrs Williams’s case, it is even sadder and worse.