The Financial Services Compensation Scheme (FSCS) is still considering whether or not it will pay out on claims relating to the failure of self-invested personal pension provider Lifetime Sipp.
Lifetime Sipp collapsed earlier this year, after receiving claims from a number of unhappy investors.
It had appointed administrators Kingston Smith & Partners at the end of March to try and salvage the firm but by late April the FSCS was beginning to invite claims from clients who lost money investing through the firm.
A document uploaded to Companies House by the administrators on 26 May showed £21.95m in consumer claims and £34.56m in other contingent consumer claims were pending against the firm, and it had a mere £716,000 worth of assets.
The FSCS has so far received 220 claims from investors who invested in failed property scheme Harlequin as well as other unauthorised schemes.
But it told FTAdviser today (27 July) it has not yet officially declared Lifetime Sipp in default and it won't be able to pay out on claims until it has.
In order to declare a firm in default it needs to have received at least one eligible claim and deem the firm unable to meet this claim.
Which group of levy payers the financial burden of any such claim will fall on - for example financial advisers - will then depended on the precise nature of the claims brought.
The lifeboat fund said it is currently researching Lifetime Sipp itself and its operations in order to understand what type of business the firm was conducting and what possible regulatory breaches may have occurred.
The FSCS determines whether to pay compensation in accordance with the COMP Rules.
These rules require the scheme to be satisfied that the conduct of the Sipp operator gives rise to a civil liability to the investors because it failed to exercise reasonable care and skill, breached regulatory requirements or breached trustee duties.
A spokesperson for the FSCS said: "We have not yet declared The Lifetime Sipp Company in default; its status is ‘pending default’.
"As of today the total number of claims registered with FSCS against The Lifetime Sipp is 220.
"All those claims are currently under consideration and being assessed on a case-by-case basis.
"The claims are too early in the consideration process for us to say anything regarding the value of those claims, breakdown by product type, nor to give an estimate as to future claims."
A similar situation arose in the recent cases of Brooklands Trustees, Stadia Trustees and Montpelier Pension Administration Services, which were declared in default in January after these requirements were met.
The Financial Conduct Authority has outlined its position on Sipp provider liability in its submission to the Berkeley Burke judicial review, which is due to enter the courts in the autumn.
The regulator stated acquiring the assets in a Sipp formed part of operating the Sipp and under section 22 of the Financial Services and Markets Act 2000 establishing and operating a Sipp as well as buying and selling securities are regulated activities, therefore Principles 2 and 6 apply.