Liberty SIPP Limited was very popular with advisors who recommended their clients to transfer their pensions from private pensions and final salary pensions and to thereafter “invest” in a range of exotic products, many of which were unregulated, high risk and illiquid.
At the time it appeared that Liberty SIPP Limited would accept investments in any manner of exotic investments, such as loan notes to private companies, carbon credits, overseas property schemes which, to the independent observer, seemed to be completely inappropriate as an investment within a pension.
The majority of the advisors who recommended Liberty SIPP Limited to their clients were not regulated by the Financial Conduct Authority. In particular, Avacade, who were not authorised to give financial advice, introduced £92 million of business to Liberty SIPP Limited, the vast majority of which was “invested” in a scheme known as Ethical Forestry which related to the plantation of trees in Costa Rica.
In July 2020 the Financial Conduct Authority won its long running High Court battle against Avacade when the Court ruled that Avacade had given financial advice without being authorised to do so by the Financial Conduct Authority.
Liberty SIPP Limited went into administration on 27 April 2020 and at that stage Embark bought Liberty SIPP’s business and customer asset base.
Any clients who were advised by Avacade could not pursue a claim against this company because they were not authorised. As such, many claims were made against Liberty SIPP Limited on the basis that they had failed to carry out the necessary due diligence. Liberty SIPP Limited defended all of these claims.
However, following Liberty SIPP Limited going into administration the outstanding question was whether or not the FSCS would compensate any clients of Liberty SIPP Limited where the advice to transfer their pensions and invest in questionable schemes was given by, for example, a company such as Avacade.
The FSCS have recently announced that they will now accept claims against Liberty SIPP Limited where there has been mis-selling perpetrated by an advisor who was not authorised by the Financial Conduct Authority. This is seen as a positive move by the authorities to assist anybody who has been hoodwinked by a non-authorised advisor to move their pension and has lost money as a result.