The Financial Services Compensation Scheme has provided funding to allow Hartley Pensions’ administrators to implement an exit strategy and start transfers out for thousands of customers.
According to an update on the lifeboat scheme’s website, FSCS has finalised an agreement with Hartley's administrators UHY Hacker Young, which allows compensation to be paid “for the benefit of Hartley Sipp customers”.
It said the funding “will allow time for the joint administrators to implement an exit strategy, which includes transferring Sipps to new providers”.
The FSCS will compensate Hartley clients by funding the costs of the administrators’ exit strategy.
Before this arrangement, as reported extensively by FT Adviser, thousands of people with Hartley pensions faced having to shell out significant amounts in penalties, just to get their money out of the failed provider.
The lifeboat scheme has now paid this funding into a trust account which will be used by the administrators, meaning Sipp members will not be charged the exit and administration charge that was originally proposed.
The FSCS stated: “The compensation addresses the costs of completing the joint administrator’s exit strategy. We understand that the annual management charge will continue to be taken by Hartley to cover the day-to-day management of the Sipps.”
The timing of the transfers will be down to the administrators and they will be issuing communications to Sipp members in due course setting out their proposed strategy and timelines.
It comes after the FSCS declared Hartley Pensions in default this morning so it was able to pay out the compensation.
While the company is in default so compensation on the exit charges can be paid, the FSCS has not opened or received individual claims against Hartley Pensions.
“Although Hartley will be in default, and it is possible that Sipp members may have claims against Hartley for matters other than the costs of the exit strategy, FSCS will not open to claims for the time being,” it stated.
“This will allow us and the joint administrators to prioritise the work needed to get the transfer process underway. There will be an opportunity for customers to raise claims against Hartley for matters other than the costs of the exit strategy in the future. A further announcement about this will follow in due course.”
The compensation is funded via the FSCS levy which advisers contribute towards.
FSCS U-turn
At the end of last month (January 29), the FSCS U-turned on its previous decision and said it would protect Hartley Sipp members by paying compensation for the exit and administration charge.
In December, as reported by FT Adviser, the FSCS said it did not have enough evidence and said the EAC would not be protected under its rules.
Last week, the FSCS said over the past two weeks, the lifeboat scheme and the joint administrators had made significant progress in agreeing arrangements and were working towards making payment by the end of February 2024.
