The Financial Services Compensation Scheme (FSCS) has received 450 claims against collapsed Lifetime Sipp Company, which has not yet begun paying out as Lifetime is still to be declared in default.
The provider, which collapsed last year after receiving claims from a number of unhappy investors, has moved from administration to liquidation, according to an entry on Companies House from April 2.
A company administration aims to help the company repay debts and, if possible, avoid insolvency, whereas liquidation is the process of selling all assets before dissolving the company completely.
There continues to be significant delays in working through the processes with the Financial Services Compensation Scheme and I estimate that our work in dealing with claims will not be concluded for several years"
Until the company is declared to be in default, the FSCS is unable to meet the claims against it.
The report on Companies House reveals on how difficult it is proving to handle 3,600 unsecured creditor claims valued at £56.5m. "There continues to be significant delays in working through the processes with the Financial Services Compensation Scheme and I estimate that our work in dealing with claims will not be concluded for several years," it states.
Lifetime Sipp, that had links to unregulated investment schemes such as Harlequin, appointed Kingston Smith and Partners as administrators.
Lifetime operated 4,746 Sipps in total across three tranches with two tranches of "untainted" Sipps and one tranche of "tainted" Sipps. There are 1,892 Sipps in the first tranche, 836 in the second tranche and 2,018 in the third "tainted tranche".
A document uploaded to Companies House by the administrators in May 2018 showed £21.95m in consumer claims and £34.56m in other contingent consumer claims were pending against the company, and it had a mere £716,000 worth of assets.
As at March 15, 2019 the company had assets of £379,000, after available cash and income from the sale of the Sipp books were offset by administration costs totalling £652,000.
The FSCS can only start paying out once it has fully processed at least one eligible claim. But to date the scheme has not been able to confirm the product type for the claims.
It stated this was because of questions around Sipp provider responsibilities with regards to their due diligence of the assets they accept.
The FSCS added this was a complex case requiring legal advice and research into the firm and its operations was still ongoing.
It stated: "Although the vast majority of the claims which we have received against the firm are pension-related, we are not yet able to confirm the product-type for the claims.
"It is very important in this type of case that FSCS obtains a good understanding of what type of business the firm was conducting and what possible regulatory breaches may have occurred."