FSCS declares three SIPP operator firms in default
The Financial Services Compensation Scheme (FSCS) has declared three SIPP operators – Brooklands Trustees Ltd, Stadia Trustees Ltd and Montpelier Pension Administration Services Ltd – in default.
The FSCS said in a statement on Friday that it has received approximately 150 claims against the companies, relating to “the way in which these firms established, operated and administered SIPPs through which consumers invested in non-standard investments such as storage pods, oil fields, diamonds and overseas property”.
The organisation said consumers could get back money they have lost as a result of their dealings with one or more of these entities, providing they are able to provie to it that “their application for compensation relates to a protected claim”, which it defines as “a valid claim made in respect of a civil liability owed by the firm, or successor [entity], to the claimant, or successor, which is covered by FSCS”.
FSCS’s chief executive Mark Neale said: “FSCS steps in to protect consumers around the UK when authorised financial services firms fail. 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. We will be getting in touch with customers of these firms as we may be able to help.”
The FSCS said that it expects to receive more claims during 2018/19, and as a result forecasts that the funding requirement for investment providers will be £34m for that year.
As reported, Brooklands Trustees – which marketed pension products to UK residents and expats under the Brooklands name – went into administration in 2016, and at that point transferred oversight for its pensions to other entities.
Adviser levy increase
As reported, the FSCS said last week that it plans to increase the amount it levies on UK financial services businesses by 5%, even though the period of time covered will only be nine months rather than 12, citing “the higher cost of enhancing FSCS resilience”.
In its 28-page Plan and Budget 2028/19, the FSCS noted that compensating people who had lost their savings through self-invested personal pensions, or SIPPs, was a particular problem.
It was the fourth year in a row that the FSCS has announced an increase in its annual levy on the industry. The FSCS was set up in 2000, and covers deposits, insurance policies and insurance brokering, investments and mortgages.
The FCA has previously highlighted concerns in the SIPP market relating to due diligence failings.