The Financial Services Compensation Scheme (FSCS) announced Friday that three self-invested person pension scheme (Sipps) operators – Stadia Trustees; Brooklands Trustees; and Montpelier Pension Administration Services – are in default.
The FSCS said it had received 150 claims for compensation in relation to these Sipp operators and expects more to follow. In addition, Stadia and Brooklands were also the trustees of the Sipps.
UK regulator the Financial Conduct Authority cancelled Montpelier’s permission to carry on regulated activities on 14 October 2011 and has declared the managing director of Montpelier “not a fit and proper person” as a result of failings in due diligence on introducers and Sipp assets.
Many of the Sipp investments in the three failed schemes were high risk speculations on oil, foreign hotel rooms and foreign vineyard investments made by consumers with little experience and modest funds. The FSCS said that, in most cases, the investments are now illiquid or worthless.
Often, victims were not actively looking for alternative pension investment opportunities but made the investment following a cold call by an overseas introducer who referred the consumer to the Sipp operator on a non-advised basis.
In some instances, investors transferred all or the vast majority of their existing pension from an occupational pension scheme into the Sipp.
The FSCS’s chief executive Mark Neale said: “We are satisfied in these cases that certain claims are eligible for compensation, and expect to receive more claims of this nature in the coming months. We will be getting in touch with customers of these firms as we may be able to help.”
The lifeboat scheme may pay compensation to an eligible claimant if it is satisfied that their application for compensation relates to a protected claim. A protected claim is a valid claim made in respect of a civil liability owed by the firm (or successor) to the claimant (or successor).