Investors in the stricken ARM Asset Backed Securities life settlements fund have challenged self-invested personal pension (Sipp) providers after two firms took different stances on the value of the fund.
Bob Sharpe, a member of the ARM Help investor steering group, publicly challenged Sipp providers Carey Group and Standard Life to explain their valuations of bonds issued by ARM. The bonds have not paid income since August 2011, and the ARM board recently sold its entire portfolio of life insurance contracts in an effort to restructure the fund.
Carey Group, which runs Sipps transferred from the collapsed Rockingham Independent, has valued bonds issued by ARM at zero after consulting with HM Revenue & Customs (HMRC) and the FSA.
But Standard Life, which also has a number of clients invested in ARM bonds, still values the investment at its full purchase price as it believes “there may still be value” in the investments.
Mr Sharpe said: “The Steering Group has received quite a number of emails from bondholders... which reinforced that Sipp holders are being treated differently from one Sipp provider to the other, and this needs sorting out as a matter of urgency.
“I have written to ARM regarding supplying Carey with a valuation that can be used when assessing incomes [but] I still have had no formal response from ARM.”
Christine Hallett, chief executive of Carey Group in the UK, said her company had valued the ARM bonds at zero after advice from HMRC. If an asset held in a Sipp is given a value which is later found to be too high, it can result in a tax charge.
Ms Hallett said: “At the time when we assessed the portfolios it was impossible to get a valuation. We had no option but to value the bonds at zero.
“Until we get clarity from ARM as to the value of the bonds it is very difficult for us as an administrator which has to follow the rules. It hasn’t been indicated to us that we should make allowances for this situation.
“I don’t think our clients would thank us if they received tax charges later down the line because of incorrect payments made by us.”
Mr Sharpe said Carey should be “applauded” if it has helped investors avoid extra tax bills but questioned why other providers had not come to the same conclusion.
Standard Life said in a statement: “We have not written down the value of the ARM investment in Sipps because there may still be value in the ARM [bonds]. Until ARM is restructured... we cannot say what the value may be, and given the recent sale of the life settlement policies some value may come from these assets alone, though we do not know what the purchase price was.”
The FSCS has begun paying out compensation to clients of Rockingham Independent, which was placed into liquidation in March 2012.