InvestmentsMay 31 2018

Sipp provider faces 150 Harlequin legal claims

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Sipp provider faces 150 Harlequin legal claims

Self-invested personal pension (Sipp) provider Guardian Pension Consultants, now known as GPC Sipp, is facing claims from about 150 unhappy investors in relation to failed Harlequin investments.

Brought by FS Legal, the claims centre on the obligation the Sipp provider had in respect of the investments, which all lost money when the overseas property scheme failed.

Harlequin Property ran an unregulated off-plan property scheme sold by financial advisers, with UK investors ploughing around £400m into the scheme, in the hope of earning supposedly "guaranteed" returns of 10 per cent. But the majority of the properties were never built.

The scheme was declared insolvent by David Ames, chairman of the Harlequin group, in St. Vincent and the Grenadines, in October 2016.

FS Legal said the case is expected to enter the courts in early 2019.

It follows a number of other court cases against Sipp providers, which also centre on failed unregulated investments.

Berkeley Burke’s long standing battle against the Financial Ombudsman Service (Fos) is due to be heard in October.

The Sipp provider is fighting a decision from 2014, in which the ombudsman ruled it had to compensate a client after it failed to carry out adviser-style due diligence on his investment.

The firm had already taken legal action following the original ombudsman decision of 2014.

In March a similar case was brought by a client of Sipp provider Carey Pensions, which is currently awaiting judgement.

In the case Carey argued it was not responsible for the client’s failed investments as he had invested on an execution-only basis and signed a contract saying it was his choice to invest.

The Financial Conduct Authority has participated in both cases, outlining its view that a Sipp firm cannot shirk its duty of care towards its clients, regardless of whether the business was written on an advised or non-advised basis..

The regulator said acquiring the assets in a Sipp was a regulated activity under section 22 of the Financial Services and Markets Act 2000, therefore a Sipp provider must conduct its business with “skill, care and diligence” (Principle 2) and “pay due regard to the interests of its customers and treat them fairly” (Principle 6).

The FCA stated the idea the client is responsible for their own decisions, for instance in an execution only setup, is only one of several factors the regulator takes into account when making and applying its rules and could not be relied on directly.

If successful, the cases could have significant ramifications for the Sipp market, which houses a number of providers with similar assets on their books.

Guardian did not respond to repeated requests for comment.

carmen.reichman@ft.com