As detailed by the FSCS in a statement in December, Hartley acquired a number of failed Sipp operator books to provide continuity of services to clients who faced uncertainty concerning their pensions when those providers entered administration and the firms were declared in default by the FSCS.
Subsequently, Hartley received a number of complaints regarding its operation of the transferred Sipps.
A number of complaints were also made to the Financial Ombudsman Service, which were upheld on the basis the firm broke regulatory rules "by not acting in the customer’s interest by paying due regard to the interest of its customers and treating them fairly".
The Fos partially upheld the complaints on the basis that continuing to charge fees that were higher for the transferred Sipps than their standard charges was also a breach, even though Hartley was contractually entitled to do so.
The Fos required Hartley to pay a rebate of the difference between the fees charged and those that would have been chargeable under an equivalent Hartley product.
On February 10 2022, the FCA issued an information request from Hartley regarding the investments made by Hartley, the firm’s capital adequacy and the complaints made against it.
Following the ban on accepting new business, the directors of Hartley concluded they would be unable to meet their liabilities and Hartley entered into administration.
Is the criticism against the FCA fair?
John Moret, principal at MoretoSipps, says with hindsight it is hard to understand why the FCA allowed Hartley to acquire the books of distressed Sipps over such a short period of time.
He adds: “One would have thought they would have ensured that the acquisitions were undertaken in an orderly fashion with full scrutiny and due diligence of the businesses ongoing performance.”
As part of its regulatory duty, the FCA has access to a wide range of data relating to Sipp providers, including capital adequacy position (which must be reported quarterly), exposure to non-standard assets, due diligence processes, exposure to cash Sipp cash holdings and so on.
It also makes frequent requests for data from Sipp providers.
Moret says: “In the past the FCA has requested information from Sipp providers on non-standard assets. The new capital regimes required a lot more information, including details of the number of complaints received – including those with FOs – and potential liabilities.”
Martin Tilley, chief operating officer at WBR Group, says: “The Hartley model was complex and brought together multiple individual entities which themselves had failed and therefore needed to be rationalised and constantly fettled for the ongoing business to be a success.”
The FCA says a formal change in control process operated by the FCA is only required when a firm acquires shares or voting rights in an authorised firm or its parent – not as in the case of Hartley Pensions, when a firm is acquiring a book of business, but not the firm itself.
