Over 3,500 unsecured creditors who lost money with collapsed Lifetime Sipp Company will take “several years” to resolve according to an administrator’s report.
The report on Companies House from 2 April sheds light 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.
The FSCS says it has not been able to declare Lifetime Sipp in default yet.
It adds the 3,600 unsecured creditors are separate from the 450 claimants who should have their claims handled within six months once Lifetime Sipp is declared in default.
In April 2018, 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”.
Then in May Money Marketing reported Hartley Pensions had bought the “untainted” assets of Lifetime and agreed to administer the “tainted” Sipps as well.
Kingston Smith and Partners subsequently wrote to 3,500 addresses to find out the scale of the claims and initially settled on 2,018 actual Sipp clients chasing almost £56m in total.
Around £22m-worth of claims are from clients who have no insurance, while £34.5m might have insurance.
Last October the lifeboat fund told Money Marketing it had sought the advice of an external legal counsel about these claims and is currently awaiting that advice.
The FSCS added once it considered the advice, it hoped to be in a position to decide whether or not to formally declare Lifetime in default so it can start paying out compensation.
The report published today says the FSCS does not yet consider Lifetime in default as there needs to be at least one eligible claim against it to conclude the claims process.
The report adds: “It is expected that this administration, on transferring to liquidation, may take several years to be concluded.”
Furthermore the revised estimate for all the administration work that has been carried out is now £340,000.