The client, Mr T, complained to the ombudsman after disagreeing with the amount Hartley was charging to administer his Sipp.
Hartley has been ordered to pay £1,000 for the distress caused and pay the difference between the Sipp fees the provider should have received and the fees it actually received to put things right.
What happened
The Sipp in question was originally administered by Greyfriars Asset Management but Hartley took this over when it bought the provider in 2018.
Greyfriars applied the following charges to the Sipp: a yearly management fee of £500 and yearly pension drawdown administration fee of £125.
Hartley assured Mr T its takeover of Greyfriars would not have an impact on the Sipp’s investments, administration of the Sipp, or the fees.
In December 2018, Hartley sent Mr T an invoice for £375 in respect of its half-yearly Sipp administration fee, but Mr T said he did not receive this.
In early March 2019 Mr T complained to Hartley that he had not received any income payments from the Sipp in respect of the period to February 2019.
A few weeks later Hartley responded telling him of his outstanding invoice.
Hartley then wrote to Mr T telling him that when Greyfriars was the administrator of the Sipp the fees were more than £900 in total, as they included services such as administration, advice and discretionary fund management.
Hartley did not provide some of these services, so its invoices were updated, to ensure that Mr T only paid for the service he received.
But Mr T pointed out the invoice he received included fees in respect of a period that predated Hartley's appointment as Sipp administrator.
Hartley then explained how it had reached the figure given to Mr T.
The client accepted this and paid £725 in fees.
Later in June 2019, Hartley received a payment of £1,712 from the Sipp.
The next month, Mr T complained to the provider saying Hartley had received a total of £2,087 since taking over the Sipp but at no time had Mr T been informed of a new fee structure or had agreed to the fees.
The lack of fee agreement, the failure to make Mr T aware of Insight and the failure to respond to Mr T’s queries regarding the deductions amount to maladministrationAnthony Arter, Deputy Pensions Ombudsman
In June 2020, a yearly review of Mr T’s Sipp showed Hartley’s fees and charges were: a yearly management fee of 0.5 per cent, plus VAT, applied to all funds in the Sipp.
It also included investment fund charges, depending on Mr T’s investment choices. This was shown as “zero”, based on his existing investments.
It also outlined adviser charges but Hartley was not making any payments to Mr T’s financial adviser for arranging the Sipp.
In July, Hartley then received £1.757 from the Sipp, which Mr T once again complained about.
Later that same month, Hartley was placed into administration.
Pension Ombudsman complaint
In summary, Mr T told the Pensions Ombudsman that after Hartley took over his Sipp he was approached by advice firm Insight but Mr T rejected its offer and therefore Insight never provided him with any advice.
But in April 2019 he noticed that payment’s had been made by the Sipp’s pension platform, 7IM, to Insight each month from November 2018. Mr T told 7IM to stop making these payments and received a full refund from Insight.
The agreed fee structure with Greyfriars covered administration, advice, and discretionary fund management but it appeared Hartley had continued to charge Mr T on the same basis even though it only administered the Sipp.
In summary, Hartley said as it was unable to provide advice, Mr T was migrated to Insight. It would have invoiced Hartley and its fee would have been paid from the fees the provider received from the Sipp. But Hartley accepted that its communication to Mr T regarding Insight was poor.
Ombudsman’s decision
Deputy Pensions Ombudsman Anthony Arter found Hartley had not provided any contemporaneous evidence to show the exact fees that had been agreed with Mr T for administration-only services.
Hartley also did not inform Mr T that it had migrated him to Insight and Mr T was only made aware of this once fees had started to be deducted.
Arter said: “I find the lack of fee agreement, the failure to make Mr T aware of Insight and the failure to respond to Mr T’s queries regarding the deductions amount to maladministration. This also applies to Hartley’s handling of Mr T’s complaints.”
He therefore upheld Mr T’s complaint.
Arter ordered Hartley to pay Mr T £1,000 for the “serious distress and inconvenience he has suffered”.
It must also calculate the total fees Hartley should have deducted in respect of the Sipp each year (maximum of £440) and calculate the total fees it actually received and then pay Mr T the difference.
Peter Kubik, partner at UHY Hacker Young and joint administrator of Hartley, said: “Compliance and regulatory failings at Hartley were a contributing factor in the decision to place Hartley into administration and to appoint myself and Brian Johnson of UHY Hacker Young as joint administrators.”
amy.austin@ft.com
