From the outside looking in, it is arguably hard to understand a world in which the Hartley Pensions business model would have worked.
As Stephen McPhillips, technical director at Dentons, notes: “Buying-up one failed self-invested personal pension provider’s book after another in relatively quick succession – and bearing in mind the fact that there appeared to be a lot of so-called 'toxic' assets and little cash liquidity in a lot of those schemes – seemed to me to be an odd model to adopt.
“Not only was there a potential challenge to integrate the acquired businesses and deal with existing toxic investments, but there was also the question in my mind about how Hartley would collect its fees for the ongoing administration work on the Sipp and SSAS books it had acquired.”
One compliance expert who did not want to be named and has worked in the Sipp market for several years suggests the money to be made from members' annual fees could have been attractive to an acquirer.
He says: "In order for a company to buy a book with a large amount of toxic assets, they have to be reasonably assured that there's enough Sipps within that book that don't have toxic assets."
Additionally, if there are commercial property investments held in the Sipp, not only would the acquiring business be getting the annual fee but they would also be getting annual fees for property administration.
Back in late 2016, Hartley Pensions was established and approved as a pensions operator under the Wilton Group.
At the time Sipp capital adequacy rules were coming into force. Conversations were already ongoing between the regulator and different Sipp firms over their appetite for acquisitions of rivals, as it was estimated that the new regulations could see one in five providers leave the market.
Between 2018 and 2020 Hartley bought five troubled Sipp businesses in fairly quick succession: a part of Lifetime's Sipp business in April 2018, Greyfriars Asset Management’s Sipp business in October 2018, Berkeley Burke’s Sipp arm in September 2019, GPC’s Sipp and SSAS business in January 2020, and Guinness Mahon's Sipp business in February 2020.
By March 2022 the FCA had stopped Hartley from accepting any new business, as a result of “serious operational and regulatory issues” identified at the company, and in August 2022 it entered into administration, with UHY Hacker Young appointed as the administrator.
Most recently on February 21, Hartley Pensions was declared in default by the Financial Services Compensation Scheme.
The events surrounding the troubles at Hartley have led many to criticise the Financial Conduct Authority for not stepping in earlier.
Hartley offered a range of Isas, life assurance and pension products including Sipps, SSASs, qualifying recognised overseas pension schemes, and qualifying non-UK pension schemes.
