MP asks govt to intervene in Hartley Pensions saga

Hanna, who is the MP for Belfast South, has written to Treasury committee chair Harriet Baldwin and pensions minister Paul Maynard asking them to investigate the Hartley Pensions issue.

In the emails, seen by FT Adviser, Hanna outlined how her office had been contacted by a constituent raising concern over their Sipp with Hartley Pension.

The person in question has a pot worth almost £2mn but is worried he could lose 50 per cent of his pot if administrators UHY Hacker Young do not reach a “fair and reasonable” exit fee for Sipp holders.

Hanna said this constituent is “looking at having a lifetime investment axed in half through no fault of their own”.

The SDLP politician has therefore asked ministers to examine this issue.

Speaking to FT Adviser, Hanna said Sipp holders impacted by the administration have been “left in a state of limbo” and “have no reassurance on potential future charges, inclusive of a costly de-registration with fees being charged from HMRC and administrator fees”. 

She said: “I am asking the Treasury and government to intervene and find a way to prevent de-registration of these Sipp's or develop actions that ensure a move swiftly with a fair and exit charge fee.

"We need a financial services that is regulated to prevent this from happening again, lifetime investments such as Sipps should at least be regulated as far to ensure there is at least partial protection from what the investor can't control which in this case was Hartley Pensions going into administration at the request of the FCA.”

We are entirely sympathetic to the investors who may have to fund the resolution but unfortunately there is currently no alternative availableUHY Hacker Young

In response, UHY Hacker Young said in the absence of funding from regulatory bodies the costs of the administration needed to be funded by an exit and administration charge. 

The spokesperson said: “Unfortunately, no viable alternative to this model has been proposed.

“It would have been unfair to allow certain clients to transfer out ahead of others before an EAC is agreed, as those who remained would be subject to the full EAC rather than it being distributed between all clients.

“The structure of this charge has been designed to be as fair and as equitable as possible, so as not to fall too heavily on any individual customer.”

UHY Hacker Young said the charge was determined by the amount of work involved in the administration. 

“That in turn has been determined by the problems discovered at Hartley, for example the flaws in internal controls, lack of detailed records and the prevalence of toxic assets,” the spokesperson said.

“We are very supportive of efforts to allow investors to access the Financial Services Compensation Scheme and to seek reassurances that HMRC will not use their discretion to deregister the Sipps, which would lead to tax charges.”

“We are also entirely sympathetic to the investors who may have to fund the resolution but unfortunately there is currently no alternative available.”

FSCS U-turn

Yesterday (January 29), the Financial Services Compensation Scheme U-turned on a previous decision and said it would now protect Hartley Sipp members by paying compensation for the exit and administration charge.

In December, as reported by FT Adviser, the FSCS said it did not have enough evidence and said the EAC would not be protected under its rules.

The EAC is intended to cover costs, including the costs for customers to transfer to other regulated companies where possible, until Hartley’s administration is concluded.

UHY Hacker Young has applied to court to ratify an EAC the administrators would make against the assets clients hold within their Sipps.

This will replace the current annual management fees Sipp clients are being charged and will enable them to eventually transfer out.

The administrators have issued the court application with a hearing date set for February 29 and March 1.

FT Adviser reported last month that this charge could amount to as much as £37mn. The administrators have said this would be to cover work arranging transfers out for the 16,741 Sipp schemes.

The administrators said it will be writing to all clients shortly to provide a calculation of each client's estimated EAC.

It said total estimated EAC constitutes approximately 2.8 per cent of the total assets under administration.

amy.ausin@ft.com