Financial Services Compensation Scheme  

FSCS receives 733 claims against Sipp provider

FSCS receives 733 claims against Sipp provider

More than 700 claims have landed at the Financial Services Compensation Scheme since it opened its doors to Berkeley Burke customers.

The lifeboat scheme told FTAdviser it has received 733 claims against Berkeley Burke’s self-invested personal pension arm since it was put into administration in September.

But the claims have not yet been passed on for processing.

The FSCS must first establish if Berkeley Burke owed a civil liability to its customers before passing the claims to the claims processing teams. 

Because of this, the FSCS was unable to say how much it expected to pay in compensation. But the administrator of Berkeley Burke’s Sipp arm, Adrian Allen, has estimated it would end up footing a claims bill of £158m.

In a statement Mr Allen said it was likely the FSCS would pay “all valid client claims” to the tune of “£158m or more” — £150m of this from 800 complaints outstanding at the Financial Ombudsman Service and £8m in relation to 28 clients bringing court action.

The FSCS said the ombudsman was in the process of transferring claims to the lifeboat fund.

The scheme pays a maximum of £85,000 on individual investment claims.

It could not say at this point who would be footing the bill for the claims but added it was likely to be the provider class.

The FSCS told FTAdviser it has separately paid out £54m for roughly 1,400 claims against independent financial advisers in relation to Berkeley Burke.

A spokesperson from the lifeboat scheme said: “The FSCS is aware that IFAs recommended many Berkeley Burke Sipp Administration customers to transfer their existing pensions into a Berkeley Burke Sipp. 

“After the transfer, customers had their pension funds placed in high-risk, non-standard investments. Some of these have since become illiquid, which means they can’t currently be sold or traded.”

Berkeley Burke went into administration because it was unable to cover the financial costs of defending claims made against it in respect of the company's alleged due diligence failings when accepting high risk investments between 2010 and 2012.

Following its collapse RSM, the company appointed as administrators, announced the Sipp arm of the business would be sold out of administration in a pre-pack deal with Hartley Pensions.

But Hartley Pensions did not take on liability for the outstanding claims against the Berkeley Burke’s Sipp arm, meaning the claims would land at the FSCS.

The Berkeley Burke group has no ties to the now defunct Sipp business and no other companies within the group are affected.

imogen.tew@ft.com

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