“Buying/acquiring a business/book is a choice that providers choose to make, no one is forced into it."
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.
The troubles left thousands trapped for more than two years in Hartley's Sipps.
In a scenario like Hartley Pensions or any other similar event, McPhillips stresses it is very important that clients and and their advisers, if applicable, should take a detailed look at the provider they are going to select the next home for their Sipp.
He adds: “Care needs to be taken to ensure that the provider they select for themselves is well run with a long track record, is profitable and well-capitalised, has the scale to absorb large numbers of complex transfers in a relatively short space of time and has no skeletons in the cupboard, which might, for example, be revealed in their published annual accounts.
“Any provider looking to take on huge volumes of clients in a short space of time, where there are significant and known issues with large parts of the book, is taking a huge risk in doing so. That could ultimately lead to yet another failure of a provider, with the attendant issues for all concerned.”
Sector still holds opportunities
While the collapse of Hartley may have put a dent in the wider reputation of the Sipp sector, it remains a market full of opportunities, according to Moret.
Back in May, he predicted that the Sipp market would grow from the current £500bn to £750bn over the next six years, to be achieved in the “streamlined” Sipp sector driven by investment platforms and newer fintech Sipp providers.
Moret says: “The real opportunity in the specialised Sipp market is through consolidation where the growing regulatory overhead can be spread across a larger group of clients. The real opportunities in the Sipp market are in the streamlined/simple sector primarily through investment platforms.
“However in some cases one can debate if these pension products are really Sipps; they have much more in common with the old-style personal pensions. If the 'pot for life' proposals are eventually adopted one can see a major growth opportunity as a Sipp is essentially just that.”
