- April 27, 2018
- Posted by: cooperstern
- Category: Uncategorized
The Financial Services Compensation Scheme (FSCS) has recently announced that it will be making compensation payments to clients who invested their pension funds through three failed self-invested personal pension funds (Sipp).
As reported by FT Advisor, the FSCS has said that it would compensate those investors who had invested with the following SIPP firms; Brooklands Trustees, Stadia Trustees and Montpelier Pension Administration Services.
The claims all relate to investments in high risk, unregulated and non-standard investments. These can range from the exotic, such as diamonds and oil fields, to the relatively mundane, such as storage pods.
The FSCS have signalled that this action is in relation to due diligence failings on the part of these three firms, citing that it is due to the way in which the firms established, operated and administered the SIPPs in which their customers invested.
Mark Neale, chief executive of the FSCS, said in his statement: “We are satisfied in these cases that certain claims are eligible for compensation, and expect to receive more claims of this nature in the coming months.
This news follows the FSCS’ announcement in January of this year that it plans to raise its levy on the financial services sector to £336m for the coming financial year, an increase of £16m. This increase specifically includes raising more money from pension advisors as the Sipp scandal continues to grow.
The Financial Conduct Authority (FCA) also appears to have increased their interest in SIPP firms in recent years. It introduced a new capital adequacy regime for Sipp firms from September 2016 which forced them to retain a higher level of capital as a buffer against bad investments, in particular, those firms which invested in non-standard assets. It also requested information on their non-standard investments in October 2017.
Mark Smith, Chief Operating Officer of Sipp firm Mattioli Woods, was seemingly encouraged by the FSCS announcement, stating, “As a Sipp provider you still have responsibility for the pension transfers you accept and the assets that members hold. As a result of the FSCS announcement, we expect to see that claims they have been pushing back for a while will now have to be dealt with.”
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