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FSCS opens claims against Sipp administrator GPC

The Financial Services Compensation Scheme says it is accepting claims against GPC Sipp that was placed into administration on 11 June 2019.

Smith & Williamson’s Adam Stephens and Henry Shinners have been appointed joint administrators of GPC Sipp.

GPC Sipp specialises in the provision of technical and administration services to Guardian Pension Trustees Limited, which acts as the corporate trustee of Sipps and SSASs.

It administers around 3,200 Sipps and around 50 SSASs, with a total investment value of roughly £130m.

In a statement the FSCS says: “FSCS is aware that many GPC customers were advised by independent financial advisers to transfer existing pensions into a GPC Sipp. Following the pension transfer, customers had their pension funds placed in high-risk, non-standard investments, many of which have become illiquid.

“FSCS has already assessed and paid a number of claims made against IFAs already declared in default by FSCS, in relation to advice customers received to transfer their pension into a GPC Sipp.

“Although FSCS is accepting claims against GPC Sipp, claims will not immediately be passed to our claims processing teams for individual assessment. Our first step is to be satisfied that GPC, due to its practices, is liable for customers’ losses.”

In May 2018 Money Marketing reported around 150 investors were pursuing legal claims against GPC Sipp over allegations it was responsible for losses incurred from high-risk investments in overseas property Harlequin.

Lead joint administrator Stephens says Smith & Williamson’s objectives are to rescue the company as a going concern; or achieve a better result for the company’s creditors if it were wound up without first being in administration; or realise property in order to make a distribution to one or more secured or preferential creditors.

He adds: “In line with these objectives, the joint administrators are continuing to trade the business whilst in ongoing discussions with a number of interested parties as part of our work to try to sell the company’s business as a going concern.  Any interested parties should contact the company immediately. All existing employees have been retained as part of this process.”

Money Marketing has also reported extensively on claims issued against other Sipp providers like Liberty SippBerkeley Burke and Carey Pensions over their role accepting unregulated investments.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Another one bites the Dust

  2. Alasdair Sampson 12th June 2019 at 6:17 pm

    SIPPs came into being in 1991 as a creature of tax and trust legislation, not as a creature of legislation regulating the provision of financial services. So a culture seems to have developed in the SIPP world that the SIPP provider/trustee is/are Teflon coated – that as nothing will stick to them then they bear no responsibility for the investments that they allow into the trust they administer and do not have any responsibility or liability in respect of the investment. That culture has continued until the present day.

    Although SIPPs have been under FSA/FCA regulation since 01/04/2007 it is only relatively recently that the FCA and FOS have been actually applying the rules to require SIPP providers to execute due diligence before accepting an investment into the SIPP trust.

    The grounds of a claim/complaint against a SIPP are too long and detailed to spell out here but they apply across the SIPP board. Almost invariably, the SIPP providers are unable to provide evidence of having undertaken sufficient due diligence to meet the tests –tests that have always existed but not enforced until recently. The case by case variables really relate only to the nature of the investments that have failed.

    I have numerous complaints to FOS against live SIPP providers and a number of claims to FSCS against defunct SIPP providers, and none of them relate to issues of suitability.

    Suitability may be an issue but that is a separate FSCS claim if the IFA is defunct or a FOS complaint against the IFA if it is still operating.

    It is not uncommon for SIPP investors to have investments of a scale that exceed the £50,000 max award that FSCS can made, leaving them with large irrecoverable losses.

    What SIPP investors need to consider especially if they were advised to transfer funds into a SIPP from a DB pension scheme or personal pension plan – as do you IFAs who have inherited such clients from another IFA – is to raise a complaint against the defunct SIPP provider with FOS and push FOS to consider the complaint in order to obtain an award that the client can then seek to enforce against the SIPP provider’s PI insurers.

    FOS will be resistant to accepting a complaint against a defunct SIPP provider but they are not obliged by the DISP rules to dismiss a complaint simply because the respondent has ceased to trade and may have been declared to be in default by the FSCS.

    If FOS can be persuaded to run with a complaint against a defunct SIPP provider and if you get an award then you can enforce that against the SIPP provider PI insurers – it won’t be easy but the alternative is that the client could be left with only £50,000 from FSCS and a large irrecoverable loss.

  3. If the FSCS determine the client was in a high risk fund and shouldnt have been, will they redirect the claimant to the adviser who made the original recommendation, or just settle the claim on the basis that the SIPP should have not have accepted the investments.

    Get your cheque books out for the next round of fund raising.

  4. Julian Stevens 17th June 2019 at 4:38 pm

    Shortly after the FCA closes its door, the FSCS seems to open its door. The correlation is remarkable.

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