FSCS pays out £5.8m on Liberty Sipp claims in first month

FSCS pays out £5.8m on Liberty Sipp claims in first month

The Financial Services Compensation Scheme has paid out more than £5.8m in compensation on about 10 per cent of the claims it received against defunct self-invested personal pension provider Liberty Sipp .

FTAdviser understands that the lifeboat scheme has paid out on 187 claims thus far but in total has received 1,860 claims against the firm.

These claims relate to due diligence failings on the part of Liberty Sipp.

The provider was only placed in default last month (January 25), which is when the FSCS started to pay out on successful claims.

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.

Liberty Sipp fell into trouble when it was hit by a number of complaints 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 this dropped to £1.5m and 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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