The UK regulator has replaced three trustees after an alleged scam saw close to £14m (€19.5m) in pension contributions lost.

The trustees ­– Alan Barratt, Susan Dalton and Julian Hanson – were responsible for 17 pension funds but have been replaced by Dalriada Trustees after the Pensions Regulator (TPR) found they had “misappropriated” £13.7m.

The regulator said the money, belonging to 242 members, had “all but disappeared” due to the payment of “exorbitant” fees and other commission charges.

The Determinations Panel found that the three trustees were acting under instructions from David Austin, sole shareholder in Friendly Trustees Limited, who was operating as a “shadow trustee”.

The Panel added that there was “ample” evidence Barratt and Dalton had abdicated their responsibilities as trustees to their respective schemes, and that they “knew or ought reasonably to have known” of Austin’s actions.

“It is recognised that it is possible for trustees to delegate certain of their duties in certain circumstances,” it added.

“However, it is unlikely this was a proper case of delegation. No trustee, acting reasonably and responsibly, could have acted in the way Mr Barratt and Ms Dalton appear to have acted.”

Andrew Warwick-Thompson, executive director at TPR, said the case bore many of the hallmarks of a pension scam.

“Our appointment of an independent trustee has helped secure approximately £400,000 from the schemes,” he said.

“However, for many hundreds of members, hard-earned savings have most likely been lost.”

In other news, the Pension Protection Fund (PPF) has seen the aggregate deficit within its 7800 Index increase by £31.3bn.

The increase, from £280.4bn to £311.7bn over the course of September, also saw the funding ratio fall by 1.7% to 79.9%, reflecting 5,101 of the 6,057 pension funds captured being in deficit.

The PPF added that scheme assets fell by 0.3% in the month to September but that overall assets increased by 4.2% to £1,234bn since the beginning of the year.