Sipp provider calls in administrators after complaints spark PI woes

Sipp provider calls in administrators after complaints spark PI woes

A self-invested personal pension provider has had to appoint administrators after it was unable to renew its professional indemnity insurance (PII).

The directors of Forthplus Pensions have this week (October 19) appointed Andrew Poxon, Alex Cadwallader and Barry Stewart of Leonard Curtis Business Solutions Group as joint administrators.

The provider fell into trouble after it was unable to renew it’s PI insurance and last month (September 1) it said it would hold off accepting new applications whilst it made arrangements regarding its insurance.

But after a consultation with the Financial Conduct Authority, it was decided that consumers needed to be protected and the firm cancelled all policies which had not received their first transfer and ceased all “in-flight transfers”. 

This led to Forthplus Pensions having to write down significant sums of revenue, and those losses placed the firm in breach of its FCA defined liquid capital requirement, according to the administrators.

Forthplus provided Sipps to approximately 2,500 customers of which many were UK expatriates. The value of assets under management at the date of the administration was £500m.  

The provider has also faced uncertainty with an ongoing Financial Ombudsman Service case relating to a complaint made against the company in October 2018, which if upheld could have led to a number of further claims being made by customers.

In a letter to investors dated today (October 20) the administrators said the Sipp had faced complaints at the Financial Ombudsman Service "relating to a small number of financial advisers, and the investments they advised on.

"The Financial Ombudsman Service has issued several representative provisional assessments which found that Forthplus had failed in their oversight in preventing advice firms from acting outside of their permission levels, and therefore had not treated its customers fairly and reasonably.

"As Forthplus did not agree with these provisional assessments, submissions were made by return and the Financial Ombudsman was preparing to issue a number of Final Decisions.

"Although these final decisions have not yet been issued, if the complaints had ultimately been upheld it could lead to a number of further claims against Forthplus."

The administrators said it was decided there was nothing that could be done in the short term given the current circumstances to rectify the position and the company "was no longer able to meet the threshold conditions to remain as a compliant business”. 

The provider was not able to continue operating and it was placed into administration to “protect the interests of customers, creditors and stakeholders”. 

The administrators are currently assessing the options available to them regarding the transfer of customers to an alternative FCA regulated Sipp administrator.

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