FSCS receives 450 claims as Sipp firm enters liquidation

FSCS receives 450 claims as Sipp firm enters liquidation

Troubled self-invested personal pension provider Lifetime Sipp has entered creditors voluntary liquidation, while hundreds of claims against it have reached the Financial Services Compensation Scheme.

The provider, which collapsed last year after receiving claims from a number of unhappy investors, has moved from administration to liquidation, according to an entry on Companies House from April 2.

A company administration aims to help the company repay debts and, if possible, avoid insolvency, whereas liquidation is the process of selling all assets before dissolving the company completely.

In the adjacent administrator's final report it emerged the FSCS has received claims from hundreds of investors, but that it could take years for these to be processed as the lifeboat fund works through the details of the case.

The FSCS has since confirmed the total number of claims received is 450 and that it has not yet begun paying out as Lifetime has still not been declared in default, although the scheme accepted the Sipp provider is unable to meet the claims against it.

A document uploaded to Companies House by the administrators in May 2018 showed £21.95m in consumer claims and £34.56m in other contingent consumer claims were pending against the company, and it had a mere £716,000 worth of assets.

As at March 15, 2019 the company had assets of £379,000, after available cash and income from the sale of the Sipp books were offset by administration costs totalling £652,000.

The administrator, Ian Robert, said in his latest report: "It is possible that the majority of the 2018 claims will be submitted to the FSCS so it is clear that the process will be on-going for some time. Indeed, it is expected that this administration, on transferring to liquidation, may take several years to be concluded."

The FSCS can only start paying out once it has fully processed at least one eligible claim. But to date the scheme has not been able to confirm the product type for the claims.

It stated this was because of questions around Sipp provider responsibilities with regards to their due diligence of the assets they accept.

The Berkeley Burke judicial review last year, which is to be appealed, came to the conclusion providers had some responsibility to act as gatekeepers when accepting new business.

The FSCS added this was a complex case requiring legal advice and research into the firm and its operations was still ongoing.

It stated: "Although the vast majority of the claims which we have received against the firm are pension-related, we are not yet able to confirm the product-type for the claims.

"It is very important in this type of case that FSCS obtains a good understanding of what type of business the firm was conducting and what possible regulatory breaches may have occurred."

Furthermore, the administrators stated the FSCS did not agree to a request to accept incoming claims directly and in bulk, saying each claim needed to be processed individually.