The Financial Services Compensation Scheme has declared Hartley Pensions in default so it can pay compensation on clients' exit charges.
According to the lifeboat scheme’s website, the defunct Sipp provider failed yesterday (February 21).
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.
Normally a company is put in default if the FSCS has received at least one claim and is satisfied the company is unable to return money to eligible customers itself.
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.
The EAC is intended to cover costs, including the costs for customers to transfer to other regulated companies where possible, until Hartley’s administration is concluded.
UHY Hacker Young has applied to court to ratify an EAC 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 in December 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.
The administrators said it will be writing to all clients shortly to provide a calculation of each client's estimated EAC.
It said total estimated EAC constitutes approximately 2.8 per cent of the total assets under administration.
Hartley Pensions entered administration at the request of the Financial Conduct Authority back in July 2022.
amy.ausin@ft.com
