Vulnerable Hartley clients sent NDAs before they can transfer

UHY Hacker Young has said clients who have been deemed as vulnerable would need to sign the document before any transaction or discussion occurs over the transfer.

As it stands, clients of Hartley Pensions are able to draw down money from their pensions in the usual manner. They can also trade investments and request their pension commencement lump sum. 

The only restrictions in place are that no further contributions can be made to client Sipps, and that the administrators are unable to facilitate transfers out at this time.

It is a free choice for such clients whether they want to sign the NDA.UHY Hacker Young

Transfers will only be allowed once the exit and administration charge is ratified by the courts, in order to “ensure all clients are treated fairly”.

However, according to the administrators, the Financial Conduct Authority has asked UHY Hacker Young to allow transfer out requests for any vulnerable client.

For example, adviser Julian Pruggmayer has been trying to help a husband and wife, both of whom are considered vulnerable, to transfer their Sipp funds away from Hartley Pensions.

However, last month he found that when he went to proceed with the transfer on behalf of his vulnerable clients, it was a requirement that both himself and the clients sign a non disclosure agreement preventing them from sharing with anyone the fact that they have been transferred out.

It is a free choice for such clients whether they want to sign the NDA, claiming to be a vulnerable client and pay a higher exit fee to cover those costs UHY Hacker Young

To do so the clients were being charged an administrators exit and admin fee of almost £9,000 for each of the Sipps held as well as £1,500 in legal fees for the NDA.

Puggmayer said: “My clients had their pension scheme moved to Hartley Pensions Ltd without any consultation and for the last 12 months have not been able to access their own money.

"It looks like they will not be able to access their money until the end of 2024 and will have to pay for the privilege of doing so.”

But a spokesperson for UHY Hacker Young said “it is not correct” to say that anyone “can’t access their money”, as while they are not yet able to transfer out, they can request a drawdown, and they can make trades within their pensions as normal.

The NDA

Pruggmayer and his clients have not agreed to sign the NDA.

The administrators said that in any transaction or negotiation that requires confidentiality it is “standard procedure” to sign an NDA prior to discussions.

They reiterated that clients are not being forced to sign an NDA before they receive their money as this only relates to vulnerable clients who are specifically asking for their Sipps to be transferred earlier than the process that the administrators are progressing.

A spokesperson for UHY Hacker Young stated: “It is a free choice for such clients whether they want to sign the NDA, claiming to be a vulnerable client and pay a higher exit fee to cover those costs incurred which are associated with transferring them out separately from all other clients.”

The administrators further confirmed that the NDa only applies to vulnerable clients wishing to transfer their Sipps before the schedule of costs is agreed by the court, which adds complexity to the process.

FTAdviser understands that once this schedule of costs is agreed, there will be no requirement for an NDA or legal costs in order to transfer a Sipp.

The costs

In terms of the exit and admin fee, this has not yet been finalised, therefore if vulnerable clients held off on transferring their costs could be less.

The administrators of Hartley Pensions have set out four cost models to calculate exit and administration charges for Sipp clients.

The four proposed cost models are:

1. Fixed fee per client model – This model is a fixed fee for all clients regardless of the type(s) of asset held or value of their Sipps. 
2. Hybrid charge based on asset type model – This model is a different charge for each type of asset held within a client's Sipp.
3. Percentage based model on the total value of the assets under administration model – This model will charge a percentage on the value of the assets in a client's Sipp; and 
4. Capped percentage charge – This model will charge a percentage on the value of the assets within a client's Sipp subject to a cap to be determined. 

A spokesperson for the administrators said: “At present, it is expected that the charge model will be separate for each Sipp based on the assets they hold.”

Regarding these fees, a spokesperson for the Financial Conduct Authority said: “All firms must treat people fairly, which includes not charging excessive fees which prevent people switching.

“We recognise that this is a worrying time for Hartley customers. We are in regular contact with the administrators of the firm to seek to ensure the best possible result for consumers and are currently engaging with the administrators to challenge their approach here.”

Hartley Pensions went into administration in July 2022.

Earlier this month (August 10), FTAdviser reported that people fighting to get their money out of Hartley Pensions faced further delays after the administrators said it will not begin its process of transferring pensions until the end of this year.

In an update to Sipp clients from UHY Hacker Young, the administrators said transfers were unlikely to happen in 2023 due to the timescale of the court application.

amy.austin@ft.com