FSCS shuts investigation into Sipp provider

FSCS shuts investigation into Sipp provider

The Financial Services Compensation Scheme has closed its investigation into North Star Sipp after it found no eligible claims.

The lifeboat scheme told FTAdviser that it received one claim against the Sipp provider, which was later rejected.

The FSCS started accepting claims against North Star Sipp in August after creating the "relatively new category of due diligence claims against Sipp operators".

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Northstar, which was dissolved in June 2009, had carried high risk, non-standard investments on its books, many of which later became illiquid.

The FSCS has already paid out on claims against IFAs involved in the sale of the products, which often included pension transfers.

But it said when it began accepting claims it anticipated there would be some relating to failings in the Sipp operator’s due diligence.

Other Sipp providers have also been hauled up over due diligence failings on clients' investments.

Several cases are still being contested in court but one of the most prominent ones was dropped last week.

The administrators of the now defunct Berkeley Burke Sipp dropped its appeal after failing to get sufficient backing to cover the potential cost.

The appeal was in relation to a High Court judgement handed down last October in which Mr Justice Jacobs held a Sipp provider could not rely on a perceived duty to carry out business as requested by the client without considering the outcome for the client in line with FCA client protection rules.

He said there were instances when a Sipp operator should intervene before accepting business, including when the Sipp provider has learnt of problems which affect the proposed investment, or those promoting the investment.

Berkeley Burke had contested the decision but dropped its action on October 4.

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