Over 700 claims have been made against self-invested personal pension provider Berkeley Burke SIPP Administration Limited. Indeed, the company’s SIPP branch went into administration in September 2019, and the Financial Services Compensation Scheme (FSCS) reports that a total of 733 claims have been received since that date.
However, the claims are yet to be passed over for processing. This is because the FSCS must first work out whether Berkeley Burke owed customers a civil liability. Only then can they pass on the claims to their processing teams.
Thanks to this legal caveat, the FSCS has not been able to provide a figure regarding how much is expected to be paid out in compensation. Despite this, Adrian Allen, Berkeley Burke’s SIPP administrator, has said that the company will probably have to end up covering a claims bill amounting to roughly £158 million.
Speaking on the issue, Allen noted that the FSCS is likely to pay all “valid client claims.” Of the £158 million, £150 million is related to 800 complaints currently sitting with the Financial Ombudsman Service, whilst the remaining £8 million is related to court actions put forward by 28 clients.
According to the FSCS, this ombudsman is in the process of moving claims over to the lifeboat fund. This scheme pays up to £85,000 for each investment claim it receives.
At this point, the FSCS has been able to say who would be responsible for covering the claims bill. It looks like it will be the provider class, however.
The FSCS claims that it has paid out a separate £54 million for around 1,400 claims made against independent financial advisers who recommended Berkeley Burke. Indeed, the FSCS has been made aware that some advisers mis-sold SIPP, recommending customers transfer their pensions to Berkeley Burke SIPP. Once this transfer had been made, their pensions funds became high-risk investments, some of which can no longer be traded or sold.
Berkeley Burke was pushed into administration due to the fact it could not cover many of its legal costs related to alleged failings surrounding due diligence when taking on high-risk investments between the years 2010 and 2012.
After the collapse of Berkeley Burke’s SIPP, it was announced that Hartley Pensions would buy out the company’s SIPP arm. However, Hartley Pensions did not accept liability for Berkeley Burke’s many outstanding claims, meaning that they landed instead at the FSCS.
The Berkeley Burke Group now has no ties to the SIPP arm, and no other businesses within this group have been affected.
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