SIPPJun 12 2019

Claims reach FSCS as £130m Sipp enters administration

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Claims reach FSCS as £130m Sipp enters administration
ByCarmen Reichman

GPC Sipp Limited, formerly known as Guardian Pension Consultants, has entered administration, paving the way for millions of pounds of claims from investors. 

The company, which administers assets worth £130m, has appointed Adam Stephens and Henry Shinners of Smith & Williamson as joint administrators.

In a statement released today (June 12) the administrators said they were looking for ways to rescue the company with a view to selling it to achieve the best results for clients.

The administrators said they have had a number of enquiries from interested parties in relation to GPC’s assets or business and hope to secure a deal to preserve the business and jobs.

They added any such sale would involve a transfer of client assets to the new provider or providers.

GPC became insolvent because it had about 2,700 Sipps holding alternative investments, several of which failed, such as Harlequin Properties, a luxury hotel development that was never built.

The assets in these Sipps were placed between 2009 and 2012. And in light of problems with these investments the company has not marketed its services since 2013, according to the administrators.

To date 141 Sipp clients have come together to launch legal action against Guardian. All of these have already been compensated for their losses by the Financial Services Compensation Scheme.

But the FSCS could only pay out a maximum of £50,000 per investment claim until March 31, when this changed to £85,000. This meant many claimants were left out of pocket when compared with their initial investment, hence they decided to bring legal action.

The FSCS today issued a statement inviting more claimants to come forward.

It stated: "FSCS is working closely with the firm’s administrators and is investigating the practices of GPC, specifically to establish what levels of due diligence were carried out by the firm, prior to permitting customers to make specific investments under their pensions.

"FSCS is aware that many GPC customers were advised by independent financial advisers to transfer existing pensions into a GPC Sipp. Following the pension transfer, customers had their pension funds placed in high-risk, non-standard investments, many of which have become illiquid.

"FSCS has already assessed and paid a number of claims made against IFAs already declared in default by FSCS, in relation to advice customers received to transfer their pension into a GPC Sipp."

A further group of investors has lodged complaints with the Financial Ombudsman Service and there have been a number of adverse adjudications, the administrators stated.

The company is contesting those complaints and is defending the litigation claims, they added.

Dealing with these complaints had been "a significant drain on resources", eventually leading to insolvency.