SIPP  

Liberty Sipp legal case falls apart

Liberty Sipp legal case falls apart

A group action against troubled self-invested personal pension provider Liberty Sipp will no longer go ahead, with claimants turning to the Financial Services Compensation Scheme instead.

FTAdviser understands that Wixted & Co acted for 28 claimants in a group action against Liberty Sipp in respect of potential claims relating to non-standard investments.

As part of this, test cases were selected and a trial was due to be heard in September 2020.

But because Liberty Sipp fell into administration in April 2020, before the trial was due to take place, a statutory moratorium was placed on the proceedings and will remain in place unless an application is made to lift it.

A moratorium prevents legal action being taken against a company when it is in administration.

According to Tim Hampson, partner at Wixted & Co, in order for an application to succeed, the administrators have to agree to the moratorium being lifted and the court has to agree that it is in the best interests of all creditors.

However, this rarely happens where claimants wish to pursue purely monetary claims, he said.

Hampson said: “It is a shame that the trial could not take place because the court would have considered a lot of the issues which were ultimately determined in favour of our client Russell Adams by the Court of Appeal. 

“With no prospect of the litigation continuing, all of the claimants have made claims at the FSCS instead.”

As of February 25, the lifeboat scheme had paid out £5.8m in compensation on 187 claims but in total had received 1,860 claims against the firm.

These claims relate to due diligence failings on the part of Liberty Sipp.

The provider was only placed in default in January, which is when the FSCS started to pay out on successful claims.

A declaration of default happens when the FSCS deems that a firm cannot meet any eligible claims made against it.

The Liberty Sipp Limited business and customer assets were sold to EBS Pensions Limited, part of the Embark Group, in October 2018, which then rebranded the Liberty Sipp as Option Sipp.

However, the legal entity Liberty Sipp Limited was not part of the sale and retained its liabilities. It consequently had to pay out against any complaints using the assets it held.

Liberty Sipp fell into trouble when it was hit by a number of complaints from clients who had allegedly lost money after making high-risk investments.

amy.austin@ft.com

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