InvestmentsJun 14 2018

Failed Sipp investors warned cash clawback could take years

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Failed Sipp investors warned cash clawback could take years

Administrators of the failed Lifetime Sipp have begun investigations into any recoverable assets but warned the process could take years to complete.

Documents published on Companies House today (14 June) showed there could be as many as 2,000 creditors with close to £56m in claims, many of whom will be referred to the Financial Ombudsman Service (Fos) or the Financial Services Compensation Scheme (FSCS) for compensation.

The administrators, Kingston Smith & Partners, said they believe a distribution will be available to creditors, with estimated total assets currently amounting to £716,000.

They said they would carry out further investigations to find whether further funds can be released.

The administration process involves selling assets to Sipp and Ssas provider Hartley SAS (HSAS), which will assist the administrators in reviewing the claims over the coming nine months, after which they will be referred to either the Fos or FSCS.

The FSCS can award up to £50,000 on investment claims, which it will then attempt to recover from Lifetime’s estate.

The administrators stated: “Throughout this process we shall be liaising closely with the consumers, Fos and the FSCS which may take a number of years to resolve, adjudicate and pay a dividend to unsecured creditors.

“The FSCS shall be subrogated for any compensation awards they make to the consumer and therefore shall more than likely have the largest claim in the administration.”

The administrator’s estimated cost is £278,000, which will need to be paid before returns are made to investors and other creditors. Further updates will be given as the administration progresses.

Lifetime sipp entered administration at the end of March, when it appointed Kingston Smith & Partners as its administrators.

By late April the FSCS confirmed it was accepting claims from clients who lost money investing through the firm, which held assets such as failed property scheme Harlequin.

The FSCS told FTAdviser in May it had received 19 claims to date -  10 claims were in progress and nine were applications underway.

It is believed about 40 claims are pending with the Fos and could yet be referred to the lifeboat fund.