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Claimants to pursue Liberty Sipp over unregulated investments

A group of 27 investors is taking action against Liberty Sipp over allegations it was responsible for losses incurred from risky investments.

Wixted & Co Solicitors has issued a case in the Circuit Commercial Court in Bristol against Liberty Sipp. The firm is also acting on behalf of investors in a claim against Berkeley Burke.

The case against Liberty Sipp concerns six unregulated introducers including Avacade, Anton Barr, S J Stone, PFR Services, Gravity Global Investments and Ethical Forestry.

There are also five unregulated investments in the case including Ethical Forestry Sustainable Timber Investments, Global Plantation Investments, Gas Verdant Investment, Sustainable Agroenergy and an investment into Gravity Child Care Limited.

According to Wixted & Co Solicitors, on 6 June there will be a cost and case management conference in Bristol where the court will set directions for the disclosure of relevant documents, the exchange of witness evidence and possibly set a window for when the trial will take place.

Wixted & Co Solicitors anticipates a trial will not take place until early 2019 at the earliest.

Wixted & Co Solicitors senior associate Tim Hampson says: “By the action, the claimants hope the court will set out the standards that Sipp operators must meet when dealing with unregulated introducers, as well as the level of due diligence that is required when accepting unregulated and high risk investments into their Sipp.

“This is with particular reference to the FCA Handbook COBS rules and the expectations communicated to firms in the FCA report entitled, ‘Self-Invested Personal Pension operators – A report on the findings of a thematic review’ published in September 2009.”

Liberty Sipp managing director John Fox says: “We have recently been contacted by a claims management company [Wixted & Co Solicitors] claiming to act for a small number of Liberty Sipp clients.

Fox says: “Such claims management companies have been targeting both Sipp providers and financial advisers for several years now. Liberty refutes any suggestion that it has ever missold investments, and will defend itself in the strongest terms from such false accusations.”

He adds: “The claims relate to a few legacy clients who opened Sipps with us between 2011 and 2013. Liberty Sipp stopped allowing clients to invest in non-standard assets in 2013, and today more than 96 per cent of the assets we have under management are in standard, regulated investments.

“As a Sipp provider, Liberty cannot offer financial advice or sell investments. So by definition we cannot missell investments.”

Also in Bristol on 20 June another cost and case management conference will set directions for the selection of lead claimants from the group litigation order against Berkeley Burke.

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. Interesting. Presumably, the claimants have already been down the FOS route (if not, why not?) and failed. It is likely to be tougher in court.

    One thing that is correct is that this will give some much needed clarity. Would be even more interesting if the court came to a conclusion directly at odds with how the FOS have decided similar cases. Breath suitably bated.

  2. Gravity Child Care! Maybe it was a black hole…(bank holiday weekend ahead).

  3. Self Invested Personal Pension should mean exactly that, and if the SIPP provider is allowed to hold the asset then the responsibility stays with the member or their adviser, otherwise you have this win win situation where you either keep the gains or blame someone else for the losses.

    I am sure that most SIPP providers simply executed the wishes of the member, and as long as the investments were permitted at the time I cannot see how they have failed in their duty of care.

    What they really needed was a banned list from the FCA but these things were going on under their noses unchecked.

  4. Julian Stevens 4th May 2018 at 6:28 pm

    Another GABRIEL failure.

  5. Julian Stevens 6th May 2018 at 8:15 pm

    If Liberty didn’t mis-sell these investments, then who did?

  6. Anthony Smith 8th May 2018 at 10:18 am

    The RPPD was first published as as a TCF consultation in 2004 and requires providers and distributors throughout the distribution chain to consider the fair treatment of customers and be judged by what they do or do not do.

    The HMRC permitted investment list for SIPPs ended upon pension simplification so you could say just about anything is allowed in a SIPP although some assets are fully taxable like residential property.

    Trustees must accept some responsibility for reviewing the assets available in their SIPP as appropriate for a pension scheme and apply some due diligence.

    If you let any old asset into your scheme then don’t be surprised if it comes back to bite you.

    • In many of these cases the providers were willfully blind in the execution of these Sipps sitting back letting the unregulated introducer’s ‘make arrangement’ for or ‘bring about’ investments in these scams. In the case of Sippchoice they approved an investment without the investment memorandum

  7. Sipp providers are very bullish about not being liable albeit they were more than happy to accept investments from all sorts of unregulated Tom DicK & Harry’s. It would appear the FOS and PO are sitting on their hands awaiting the verdict in the Carey’s High Court claim

    • I think, to be fair to FOS, that they’re waiting on the judicial review into their Berkeley Burke decision. To quote https://www.moneymarketing.co.uk/berkeley-burke-criticised-burial-plot-sipp-investments/:

      “The provider is … locked in a battle with the Financial Ombudsman Service over a ruling dating back to 2014, when an adjudicator upheld a complaint against it for failing to carry out adequate due diligence on a £29,394 unregulated collective investment scheme.

      Berkeley Burke launched a judicial review of the case but last October a High Court judge refused the company an appeal to arbitration.”

      • Julian Stevens 8th May 2018 at 4:47 pm

        Hmmm, interesting. The thing is, though, that if SIPP operators are judged in law to be responsible for undertaking DD on every and any type of investment they allow, such a requirement could easily spill over into them being held liable for the suitability (or otherwise) of just about ANYTHING.

        That aside, Liberty must surely be on a very sticky wicket trying to defend its acceptance of investments recommended by unregulated third parties, whose prime motivation was to grab as large a slice of the pie as possible.

  8. Fox says: “Such claims management companies have been targeting both Sipp providers and financial advisers for several years now. Liberty refutes any suggestion that it has ever missold investments, and will defend itself in the strongest terms from such false accusations.”

    This is nothing to do with Financial Advisers. These Sipp Companies have broken every rule in the book. These claims companies have been hired by the scammed investors to get justice. There is no way of escaping this.

    • Their arrogance takes some believing as does the time it has taken to hold them to account particularly with unregulated introducers where the issues are regulatory breaches as opposed to interpretation of due diligence failure albeit these are self evident too – the FOS and PO seem at odds with each other and the FCA appear inept feeling

      • John Fox states that he has been contacted by Wixted & Co claiming to act for a small number of investors, well wait till the rest get in touch, if you think that around 1,000 investors scammed out of MILLIONS is a small amount then I think you should redo your sums.This is a lot of lives ruined and involves MILLIONS

    • John Fox suggests they have not accepted any investments in non-standard assets since 2013. However, they are listed as having 56 clients with Strand Capital DFM accounts on the Smith and Williamson administration update, which would have been set up from 2015 onwards and the assets were predominantly invested in dodgy property bonds that are illiquid and would have to be categorised as non-standard for Cap Ad purpose. They are either not able to recognise what constitutes non-standard assets or they are making misleading comments. It seems highly likely that they have accepted plenty of non-standard assets since 2013 but have categorised them incorrectly to reduce their Cap Ad requirement. Liberty have been working with unregulated introducers for years and IMO have totally failed to protect clients from financial losses due to not conducting appropriate due diligence. If other SIPP providers turned away some of the investment requests that Liberty subsequently accepted, then this suggests Liberty ignored the red flags. If a significant proportion of the 4% of non-standard assets held have failed and Liberty are on the hook for failing to perform appropriate due diligence, this could still equate to a potential compensation bill in the tens of millions. I sincerely hope they have the support of their PI insurer, otherwise a run of upheld complaints for investment loss compensation is likely to put them out of business. If I was an IFA with clients with Liberty SIPPs I’d be looking for an alternative safe provider to transfer them to

      • If I was an IFA with clients with Liberty SIPPs I’d be looking for an alternative safe provider to transfer them to

        This is exactly the view reported to being expressed amongst IFA’s a week or so ago – steering clear

        Some may boast large capital adequacy however the multiples are eye watering

        • IFAs should also be wary that Liberty are one of the few providers that have not been able to cover their Cap Ad requirement with Tier 1 capital. 15% of their Cap Ad is covered by debt or preference shares. It should also be noted that years ago John Fox stated they would not take a share of client interest, but they back tracked and now take approx. 0.5% since transferring arrangements to Metro bank. Without this interest it’s doubtful they would be in profit which tells you everything you need to know about their ill judged decision to take a race to the bottom on charges. Mr Fox exacerbated the situation by also committing to a 3 year fee freeze, which I bet he now regrets. They could be the first provider with 10,000+ clients to fail and it shows the dangers of selecting a provider solely because they are the cheapest.

        • The so called Court meeting that Liberty Sipp are attending on 06/06/18 has the FCA in attendance re 27 claims with nearly another 1,000 stacked up. Once Berkeley Burke are found liable in October its all over

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