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Sipp companies join forces as Embark acquires Liberty client bank

Business-Handshake-General-Hire-Appointment-700x450.jpgPension provider Embark Group has bought Liberty Sipp’s client book for an undisclosed sum.

Embark has not acquired the actual Liberty Sipp company, which is set to be wound up as part of the deal.

Embark says it will help the orderly wind-up of the business once the acquisition is completed.

The transferring Liberty Sipp products will be re-branded and operated by Embark’s subsidiary EBS, which will receive a £2m injection of regulatory capital to run the Sipps.

The new business will be headquartered within the Embark Group in Greater Manchester, with a satellite operation in London.

Embark chief executive Phil Smith says the transaction provides protection for the consumer clients of Liberty and is positive for the employees of both businesses.

The deal provides a degree of certainty for Liberty Sipp which has faced pressure from solicitors Anthony Philip James & Co over misselling allegations.

APJ allege Liberty Sipp failed to treat customers fairly by accepting a high volume of clients who were unsuitable for Sipp investments from an unregulated introducer.

Liberty Sipp managing director Jon Fox says: “The timing and cultural fit of this transaction is excellent for all of us at Liberty. We are moving from being one of the fastest growing small players in the Sipp market, to driving the continued growth of one of the largest sector players.”

Last week Aim listed pensions provider STM Group said it agreed to pay up to £400,000 to buy a majority stake in embattled Sipp provider Carey Pensions.

Sipp providers are waiting for two court cases to clarify their duties in relation to unregulated investments.

The first is a ruling from the Carey Pensions trial and the second is from a judicial review into a Financial Ombudsman Service ruling about Berkeley Burke that was heard last week.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. So basically, Liberty are ditching the liabilities on what will now be (or is now) a shell company with no assets by becoming part of Embark.

    Classy guys, really classy.

    • The assets are transferring but not the liabilities. The price for the book of SIPP clients will go to the firm which will have to deal with any complaints as it is wound down. The amount paid was not disclosed but may go some way towards compensating any client claims.

      This happens all the time with advisory firms, as many firms cleaned up during and after the pensions review with the wisest buying the client bank and not the liabilities, as also happened recently after the British Steel controversy.

      It seems the same is happening in the SIPP world and hopefully the better capitalised firm will be able to deal with the non-standard assets left over without having been responsible for allowing them on board in the first place.

      Of course, they could just be left to collapse leaving both the claims and the resolution of distributing all the assets, which doesn’t really help anyone not least the poor client or the FSCS liability.

  2. The FCA really need to start taking action and regulation needs to change to ensure that the assets of any providers that were responsible for financial losses are used to fund compensation rather than the value of those assets shift to another company which has no exposure to legacy liabilities. No doubt the rest of the industry will now have to foot the likely compensation bill via an additional levy to the FSCS now.

    This whole deal is a disgrace and illustrates how simple it is for failing SIPP providers to escape both censure and liabilities. Both parties have a lot to answer for.

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