Indulging his passion for motorsport, Richard Wells roared happily around the Silverstone track until he spun, bringing his race to an abrupt end.
Just 11 days later, on March 23, his funeral plan company Safe Hands suffered the same fate when it collapsed and called in administrators.
Silverstone’s rotation may have shaken the pride of Cocksure Wells, but the failure of Safe Hands has left 47,000 customers – many of them elderly or vulnerable – facing financial losses amounting to thousands of pounds.
Dismally, the FRP administrator admitted last week that he had only recovered £3.7m in cash of the £65m that should have been confined to an independently managed trust fund to cover the cost of the funeral. FRP fears that it will never recover the full amount.
In recent weeks, the Mail on Sunday’s personal finance editor Jeff Prestridge has revealed how the staggering lack of regulation in the prepaid funeral industry has allowed successive owners of Safe Hands to embezzle money from the trust fund, largely to offshore accounts. Ironically, the company’s demise appears to have been triggered when the Financial Conduct Authority (FCA) announced that it would finally start supervising these companies from July.
Failed funeral boss Richard Wells (left), 35, was driving Silverstone in a supercar less than two weeks before his business went bankrupt, leaving nearly 50,000 pensioners facing losses
Richard Wells (pictured driving) was taking part in the Praga Cup, a six-stage supercar competition, in which wealthy enthusiasts team up with professional drivers
Safe Hands withdrew its application for accreditation by the regulator in February when it became clear it would not meet the required standards. It collapsed the following month.
Now, an MoS investigation has unearthed more astonishing details about how the business operated for more than a decade.
Founded in 2010 by father and son Peter and Sean Cavanagh, company accounts show money from the trust fund was diverted to paying bonuses to them and an associate as early as 2014.
As he sought to expand, Safe Hands won the endorsements of TV GP Dr Hilary Jones and World Cup-winning goalkeeper Gordon Banks, but he also launched a daring plot against his rivals. Posing as independent financial advisers looking for new business, some of its salespeople covertly recorded representatives of other companies making disparaging comments about Safe Hands in a meeting.
Lawyers for the Yorkshire firm sent transcripts of the comments to his rivals and sued them for ‘vicious, unprovoked verbal attacks’ which he said were ‘a desperate and disgracefully unprofessional effort to gain an edge over the competition “.
Thousands of customers who paid for funeral plans risk losing ‘significant’ sums of money following a major industry crackdown (stock photo used)
However, the case fell apart when the ruse came to light, leaving Safe Hands with a six-figure bill for legal fees. The 2016 court saga also revealed how the National Federation of Funeral Directors (NFFD), which had endorsed the firm and was presented as an independent body, was in fact one of Safe Hands’ sister companies and had the same owners.
The Cavanaghs did not respond to repeated requests for comment, but analysis of the accounts shows monies from the trust fund when they were in charge were lent to SHFT Properties, another company controlled by Safe Hands, which later been used to buy at least five commercial properties worth £1.7 million. Although a trust is permitted to make such investments, it should be done with the interests of plan holders at the core.
In 2018 alone, another £2 million was transferred from the trust fund and paid into the company’s coffers before being distributed as dividends to shareholders.
Wells, 35, bought Safe Hands in February 2020 through his private equity firm SHP Capital Holdings and quickly replaced the fund’s independent directors with an outside company whose chief executive was a former business partner.
A director of 19 companies and former boss of eight, including several that collapsed, Wells has an affluent lifestyle, owning two large homes in the West Midlands, each worth around £1.2million.
A six-bedroom mansion in Staffordshire has a lake and is set in five acres. A Range Rover and a Bentley with personalized license plates were parked there last week.
The deals, which typically cost between £3,000 and £4,000, promised customers peace of mind that their loved ones would not be hit with a big bill when they died (stock image used)
Wells competes in the Praga Cup, a six-stage supercar competition in which wealthy enthusiasts team up with professional drivers. Wells and partner Alex Kapadia are in fourth place, and the businessman is planning his next race at Snetterton in Norfolk on May 14-15.
Safe Hands customers, on the other hand, are digesting bad news. The FRP admitted that tracing the money diverted from the trust fund was proving “difficult and time-consuming”, adding: “A significant proportion of the funds appear to have been used to make illiquid and high-risk investments, many of which are based in offshore jurisdictions.
Last night Wells said: ‘It is with deep and sincere regret that Safe Hands finds itself in this position. The business was acquired in good faith to provide funeral plans in a growing industry. Due to the economic effects of Covid and other business pressures, the decision has been made to place the business into administration to ensure the best outcome for plan holders.
Dr Jones did not respond to a request for comment, but there is no indication that he or Mr Banks knew of or were involved in any irregularities. FRP declined to comment.
An FCA spokesperson said: “The government has changed the law to bring prepaid funeral plans under our regulation from the end of July 2022. Until then companies such as Safe Hands are unregulated and we have limited powers.
Shameless big cat
By Jeff Prestridge – Personal Finance Editor for the Mail on Sunday
Abusing the trust of the elderly is a truly despicable act. Unfortunately, the administrators of Safe Hands Plans have taken financial abuse to the next level. It fills my bones with anger.
Thousands of people, most in their 60s and 60s, thought they were doing the right thing by purchasing a Safe Hands funeral plan. The right thing for their children, their paid and orderly funerals.
But the administrators took their money and made financial gains for themselves. First by taking some of the money held in trust on behalf of clients and feeding it into the company’s coffers so they can pay themselves handsome dividends, then by plundering the assets of the trust to finance other investments and hiding them in distant tax havens such as the Cayman Islands. They took advantage of an unregulated market and made hay. Unfortunately, they are not alone. It won’t be long, I’m afraid, before other greedy funeral plan providers rise to the surface like scum.
It remains to be seen whether the architects responsible for the financial plunder that took place at Safe Hands are held accountable for their financial sins. I really hope so. Justice must prevail.