The Financial Services Compensation Scheme has recently had to pay out more than £17m for claims made against three SIPP operators who were declared in default in January.
The three operators in question, Brooklands Trustees, Montpelier Pension Administration Services and Stadia Trustees were put into default after a ruling focused around due diligence on investments. The FSCS has so far had to pay around £9m in compensation across just over 300 successful claims against Brooklands, with more than 900 claims received to date.
As for Stadia, there has currently been around £7.5m paid out across more than 220 successful claims, while a further £600,000 has been paid in relation to 17 claims against Montpelier. Each of these firms was declared in default once it was decided that due diligence on many of the investments they accepted could not be considered adequate in certain situations, for example, if it came to them via an unregulated introducer.
The FSCS stated in a recent newsletter that it expects to pay over £30m in relation to at least 1,300 claims made against SIPP providers this year alone. In a January bulletin, the FSCS highlighted the issue of unregulated investments being accepted by SIPP providers. Such investments include ‘oil investments, foreign hotel investments and foreign vineyard investments.’
The due diligence being carried out with regards to SIPPs has been big news recently, particularly after SIPP provider Berkeley Burke had their appeal for judicial review on a decision by the Financial Ombudsman Service (FOS) thrown out by UK courts.
The FOS made a decision that Berkeley Burke was indeed at fault for failing to carry out the required due diligence with regards to unregulated investments they accepted. This recent decision prompted the current Financial Conduct Authority chief executive Andrew Bailey to send out a ‘Dear CEO’ letter to all SIPP directors, asking them to think through the implications of this ruling.
Additionally, a recent FSCS newsletter said that they will ‘continue to monitor developments in the sector more generally and how they might impact on our approach to claims, notably the recent judicial review challenge of a FOS decision and a number of SIPP operator cases that are currently before the courts’.
Our team at Pension Justice are highly experienced in working with clients who have been the victims of bad SIPP advice that has cost them money. If you are looking to explore a potential compensation claim for a mis-sold SIPP, get in touch with us today by phone on 0800 014 8275, email on email@example.com, or contact form on our Contact page.