James Hay 

James Hay's HMRC penalty talks drag on

James Hay's HMRC penalty talks drag on

IFG Group, parent of self-invested personal pension (Sipp) provider James Hay, has revealed the resolution of its legacy issues with HM Revenue & Customs (HMRC) is taking longer than expected.

The company revealed in a market update today (December 13) that it has continued its engagement with HMRC to attempt to address their concerns in relation to Elysian Fuels.

“However, there remains significant uncertainty as to potential outcomes and this issue will take further time to resolve,” the company stated.

Nevertheless, IFG Group maintains a strong balance sheet, retaining cash to cover the worst-case outcomes in respect of Elysian and other legacy matters that are yet to be resolved, it guaranteed.

The company has previously estimated its total exposure as a result of the Elysian Fuels issue is £20m.

Elysian Fuels was sold as a scheme investing in renewable energy projects in the UK and the US, including in 2013 the launch of a bioethanol plant in Grimsby.

About £200m was invested in the scheme - which was marketed as suitable for experienced investors only, with a minimum investment of £50,000.

As much as £180m is believed to have been invested via Sipps, with provider Rowanmoor also having some clients with money in the scheme.

IFG Group also revealed that the wider reviews of non-standard investments and small self-administered schemes (Ssas) loanbacks “are now substantially progressed”. 

Discussions with HMRC in relation to associated sanction charges are progressing and these are expected to fall within existing provisions – the company set aside £0.5m in August to deal with James Hay legacy issues.

The Sipp provider continues to engage with the Financial Conduct Authority (FCA), and its insurers, and “is addressing any potential customer detriment in relation to the non-standard investments book,” it said.

The company stated: "The review of the legacy dual trustee Sipp/Ssas book, highlighted in the interim results, is progressing and we expect to update the market on the scale of the exposure in the year end results.  

"Following this, we believe we will have reviewed all material risk areas within the two businesses, providing a robust position for future growth."

In the first 10 months of 2018, James Hay added 4,000 new Sipp clients, a decrease of 22 per cent when compared with the previous year.

This downturn was driven by equity market volatility and the slowdown in defined benefit (DB) transfers impacting the Sipp market, IFG Group stated.

Assets under administration at the end of October stood at £26bn, up 2 per cent from the previous year, with net inflows largely offset by adverse market movements. 

The company also revealed the Sipp provider is enhancing its platform solution to support expansion into the wider investment platform market, including general investment accounts and Isas, which are expected to represent approximately one third of new business in assets under administration by 2021.

James Hay is targeting an annual growth in revenue of 7 per cent over the next three years, with operating margin improving from 19 per cent in the first half of 2018 to 25 per cent by 2021.