A YORK-based independent financial advisor who established a new commercial lending fund backed by his clients’ pensions is closing in on the £50 million lending mark.

Mark Pepper, founder of York-based IFA Grosvenor Financial Consultants, is believed to be the first IFA in the UK to have developed an innovative pension lending platform following extensive work with HMRC and pension law experts.

His business has seen more than £27 million in lending in the past year, and more than £47 million since the first loan was made in 2009.

The tax efficient system devised by Swinegate-based Grosvenor, with the help of a team of pensions, tax and banking lawyers at Bond Dickinson, enables private and company pension pots to be lent commercially against secured investments, typically commercial property developments that require funding for building work.

To date, Grosvenor’s clients have been invited to make loans in 21 separate ventures, lending a total of £47 million.

The fund’s first facility of £7.2 million of debt backed Skelwith Developments’ £45 million Raithwaite Hall Hotel and Spa complex at Sandsend, near Whitby, and was repaid with interest to exiting investors over 18 months.

Mr Pepper said: "The success of the first completed loan has been well received by the lenders, and many have backed further issues and opportunities.

"The lack of available funding, particularly in the space of commercial property development projects where banks have largely withdrawn lending, has led to a high demand for working capital in the region, and we have been able to cherry pick some great Yorkshire projects to finance.

“Raithwaite Hall is a great example of a copper-bottomed asset-backed lending venture that we have been able to open up for pension lending using our model."

Mark Casey, of Bond Dickinson, has advised on the financing structure of the scheme for five years.

He said: "The innovative use of pensions to lend to commercial firms has opened up opportunities for both the lenders and the firms who need the funding, and it has been a fascinating challenge to help Mark design a robust, collateral secured and compliant scheme that ticks all the boxes for the pension trustee operators, HMRC and the individual lenders.

"We have invested several years of work into perfecting the scheme’s legal framework and the resulting, compliant scheme has pension trustee approval, which is critical in this market."

Mr Pepper has also been a director of Yorkshire Carnegie for five years and jointly heads the York-based corporate events company Sporting Connexions Ltd, which runs charitable events including the sell-out York Sportsman’s Lunch that attracts more than 650 business people to York Racecourse every November.