An adviser has written to MP William Cash asking for help in making sure that Hartley Pension clients pay fair fees.
In the correspondence, seen by FT Adviser, adviser Julian Pruggmayer told Cash, the Conservative MP for Stone, that “help is needed urgently” to ensure Hartley Sipp holders pay a “fair and reasonable exit fee” to administrators UHY Hacker Young.
As reported, UHY Hacker Young has applied to court to ratify an ‘exit and administration’ charge that the administrators would make against the assets clients hold within their Sipps.
This will replace the current annual management fees Sipp clients are being charged and will enable them to eventually transfer out.
The administrators have issued the court application with a hearing date set for February 29 and March 1.
FT Adviser reported last month that this charge could amount to as much as £37mn. The administrators have said this would be to cover work arranging transfers out for the 16,741 Sipp schemes.
In his correspondence to Cash, Pruggmayer said: “The figure sought of approximately £40mn is considered highly excessive and doesn’t appear in line with the FCA’s policy of treating customers fairly.
"It also runs counter to the new consumer duty rules imposing higher standards, introduced by the FCA from 31 July 2023.
“It was not the fault of clients that Hartley went into administration following breaching the FCA’s capital adequacy rules.
“It is clearly unfair for UHY Hacker Young to seek to charge clients exorbitant fees to transfer, thereby diminishing their pensions. This surely also defeats the objective of having ring fenced pension trusts to protect assets which are outside the Hartley company that has gone into administration.”
A spokesperson for UHY Hacker Young told FT Adviser: "We have every sympathy for the clients of Hartley. The very unfortunate situation that they find themselves in is obviously not their fault.
"What we are trying to do is find a resolution to the problems faced by the investors at Hartley in a way that is fair to as many of those investors as possible, and that treats all of the investors equally.”
The spokesperson explained the administrators approached all relevant government bodies for funding of the administration but "unfortunately we were unsuccessful.
"As there is insufficient funds within the business of Hartley, there is only one place [from whence] the costs can be funded."
They added: "Without additional finance from the government or regulatory bodies, the cost of resolving the problems found at Hartley does fall with the customers of Hartley.”
What has happened?
Hartley Pensions entered administration at the request of the Financial Conduct Authority back in July 2022.
Last month (December 1) the Financial Services Compensation Scheme confirmed any exit and administration charges would not be eligible for redress by the body.
At the time the FSCS said: “FSCS also does not consider that the damages a court would award in relation to Hartley’s alleged failings would include the Exit and Administration Charge, because there isn’t a close enough link between the actions of the firm and the proposed charge.”
