Collapsed self-invested personal pension provider Liberty Sipp has been placed in default by the Financial Services Compensation Scheme, a move which could see thousands of claims paid out.
The provider was placed in default yesterday (January 25), paving the way for the lifeboat scheme to pay out on any eligible claims against it.
The FSCS told FTAdviser it has so far received 1,696 claims against the firm.
It is not yet known how much the FSCS is expecting to pay out on these claims, as none have yet been paid.
A declaration of default happens when the FSCS deems that a firm cannot meet any eligible claims made against it.
Liberty Sipp was advised to enter administration in April last year due to the number of claims it received relating to high-risk non-standard investments.
The Liberty Sipp Limited business and customer assets were sold to EBS Pensions Limited, part of the Embark Group, in October 2018, which then rebranded the Liberty Sipp as the Option Sipp.
However, the legal entity Liberty Sipp Limited was not part of the sale and retained its liabilities. It consequently had to pay out against any complaints using the assets it held.
In August 2018, the Fos said it had received more than 500 complaints about Liberty from clients who had allegedly lost money after making high-risk investments.
According to a statement from the Sipp provider’s administrators, published on Companies House last summer, as of March 2018 Liberty Sipp had a turnover of £2.9m and profit of £371,000.
But the company later saw turnover drop to £1.5m and recorded a loss of £346,000 for the period ended September 2019.
The management accounts for the period ended March 31, 2020 saw turnover reduced to nil, and losses of £95,000 were recorded as the provider continued to defend legal proceedings brought against it.
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