Financial Services Compensation Scheme  

FSCS reviews 130 claims relating to Sipp firm

FSCS reviews 130 claims relating to Sipp firm

The Financial Services Compensation Scheme (FSCS) is reviewing 130 claims that have been made against self-invested personal pension (Sipp) provider CPPT Services Limited.

The lifeboat scheme said the work was in the early stages and the firm has not been declared in default. The total value of the claims has also not yet been determined.

CPPT entered a company voluntary arrangement in August 2017. The FSCS said it has been receiving claims against CPPT since February of this year. 

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The FSCS is not able to pay out on claims unless it has declared the firm in default. In order to do so the firm needs to have received at least one eligible claim and be deemed unable to meet this claim.

An FSCS spokesman said the investigation centred on whether or not CPPT failed to meet its regulatory due diligence requirements.

It is unclear what exact business or time frame the gripes relate to.

The news comes as the lifeboat fund has been faced with increasing numbers of Sipp related claims in recent months.

In the financial year 2017/18 it paid out £112m in compensation for such claims, representing an increase of 7 per cent on the £105m paid out in the previous year.

According to the scheme's annual report, published in July, the vast majority of these claims related to customers invested in high-risk, non-standard asset classes "many of which become illiquid and potentially insolvent".

The financial burden of the levy falls on the industry but which group of levy payers is hit hardest - for example financial advisers - depends on the precise nature of the claims brought.

The FSCS announced in May it would levy firms £71m more than it had forecast in its budget in January and 12 per cent more than last year when the levy totalled £363m.

Life and pensions advisers were asked to pay an extra £52m towards the cost of running the FSCS, as a string of failings around defined benefit (DB) advice set off the additional cost.

The number of Sipp complaints received by the Financial Ombudsman Service is also on the up.

Figures released by the ombudsman in January showed it had received 1,575 complaints about Sipps in the first three quarters of 2017/18 compared with 1,493 for the whole of the previous year.

CPPT did not respond to a request for comment.