The Financial Services Compensation Scheme has paid out almost £13m in compensation claims against four failed Sipp advice firms, Money Marketing can reveal.
The FSCS declared TailorMade Independent, 1 Stop Financial Services, Kynaston-Carnoustie Financial Consultancy and Crawford Scott in default in July following Sipp transfer claims against them.
The FSCS says it has received 450 claims against 1 Stop and paid £7m in compensation. It has received 362 claims against TailorMade and paid £5m in compensation.
It has also received 53 claims against Crawford Scott totalling £500,000, and 37 claims against Kynaston-Carnoustie totalling £450,000.
The FSCS has issued repeated warnings over the rising number of Sipp claims, and last month hit life and pensions intermediaries with a £20m interim levy.
The lifeboat scheme said the primary driver for the interim levy is its recent decision to start paying compensation for losses in the value of investments held in Sipps, as part of advice claims over Sipp transfers.
The FCA banned 1 Stop partners Andrew Rees and Timothy Hughes and fined them £490,100 in April 2014. They were ordered to pay their penalty to the FSCS in the first instance of a fine being paid to the lifeboat scheme.
1 Stop advised nearly 2,000 customers between October 2010 and November 2012 to transfer into Sipps and invest in diamonds and overseas property.
In March the regulator banned and fined former TailorMade directors Lloyd Pope and Peter Legerton.
Between 2010 and 2013, the firm advised 1,600 customers to invest £112m in unregulated investments via Sipps.
More than half of the firm’s customers invested in overseas property operated by the Harlequin group of companies, which is under investigation by the Serious Fraud Office.