Self-invested personal pension (Sipp) provider Berkeley Burke has written to clients demanding they pay a fee on assets valued to be worthless by lawyers acting for investors.
In a letter dated 22 February, seen by FTAdviser, the company asked for a payment to be made in regard to storage pod investments, which was levied separately to the Sipp administration fee.
The letter stated: "Please find enclosed our fee invoice in respect of the StorePod element of your plan.
"This fee is charged annually and is separate from your normal annual administration fee."
Berkeley Burke charges £150 plus £30 VAT for what it calls a Storepod annual fee, which is to be taken directly from the client's fund and added to the annual administration fee of about £250 plus VAT.
It is unclear what the fee is for.
For clients with no funds left in their Sipp cash account, fees are accrued on an annual basis and remain payable.
The firm is facing the prospect of legal action over alleged mis-selling of storage pods and other assets through Sipps.
Tim Hampson, associate solicitor at law firm Wixted & Co, which is bringing the claim, said: "I am not aware of Berkeley Burke ever agreeing to waive its annual fees.
"This is despite the fact that the assets held within our clients’ Sipps are in the vast majority of cases non-income generating.
"In several cases, we have written to Berkeley Burke and pointed out that our clients' pension funds are being gradually eroded by the application of Berkeley Burke's fees and charges, but Berkeley Burke has never been prepared to suspend or waive the fees."
Mr Hampson said the assets in the clients' Sipps were effectively worthless because they did not produce income and investors were struggling to sell them on.
The Financial Services Compensation Scheme and the regulator have continuously expressed concern about storage pods investments in relation to Sipps.
In January this year Chief executive Mark Neale wrote in a blog post the scheme had seen increasing numbers of Sipp claims in relation to “very risky and illiquid assets which promise much and deliver little.”
He wrote: “Property in Cape Verde was the illiquid asset of choice a year or two ago; now it’s storage pods and tropical forestry.”
Store pods were also highlighted in an alert from the then regulator, the Financial Services Authority (FSA), which stated: “We have seen financial advisers moving customers’ retirement savings to Sipps that invest wholly or primarily in high risk, often highly illiquid unregulated investments.
“Examples of these unregulated investments are diamonds, overseas property developments, store pods, forestry and film schemes, among other non-mainstream propositions.”
Permission to pursue a group litigation, brought by 77 clients with £3.7m of assets allegedly lost, was granted in January and is due to enter the courts later this year.
The investors claim Berkeley Burke was acting in a 'joint enterprise' with nine introducers who sold single-asset high risk investments ranging from storage pods to forestry in Australia, residential property in Arkansas and a holiday apartment in Grenada.
They claim the introducers carried out regulated activities without the relevant permissions, i.e. giving advice to transfer into the Sipp.
Berkeley Burke has denied any wrongdoing and said each Sipp had been established on an execution-only basis therefore it had had no obligation to assess suitability or appropriateness and that it had been required to act in accordance with a specific instruction by the client to invest.
Claims are also being brought against rival Sipp provider Carey Pensions for its part in selling unsuitable storage pods through Sipps
Berkeley Burke did not respond to requests for comment about its fees and Mr Hampson's concerns.
carmen.reichman@ft.com
