Beleaguered pension provider Liberty Sipp has entered administration with Andrew Poxon and Alex Cadwallader of Leonard Curtis named as joint administrators on 27 April 2020.
The firm’s trading assets were sold to a subsidiary of the Embark Group in October 2018, after over 500 mis-selling claims were filed with the Financial Ombudsman Service (FOS) in the summer of the same year.
According to the Financial Conduct Authority (FCA), Liberty Sipp was forced to enter administration due to the volume of potential claims it was facing for its high-risk non-standard investments, which would have caused the pension provider to become insolvent.
In March 2020, International Adviser reported that the firm lost two FOS cases after the ombudsman said it breached duty of care when it accepted investments from the risky Ethical Forestry scheme.
Prove lack of due diligence
As Liberty Sipp enters administration, this means that clients are able to file a claim with the Financial Services Compensation Scheme (FSCS); and, if it is deemed successful, they will be able to get back up to £85,000 ($105,749, €97,557).
The lifeboat scheme said: “We’re aware that FCA-authorised independent financial advisers recommended many Liberty Sipp customers transfer their existing pensions into a Liberty Sipp.
“Other customers made arrangements to transfer their pensions through unauthorised firms.
“After the transfer, many customers had their pension funds placed in high-risk, non-standard investments. Some of these have since become illiquid, which means they can’t currently be sold or traded.
“For FSCS to be able to pay your claim we must prove that Liberty Sipp failed in its due diligence – in other words, did Liberty Sipp do certain checks on the non-standard investments that would hold their customers’ pension funds, before accepting them into its Sipp investment portfolio?
“Did it make sure they were appropriate for a Sipp, and did it identify any potential issues with them? Also, if it did identify potential issues, did it tell the customer?
“If you have already made a claim to the FOS, they will contact you in regards to the next steps,” the FSCS added.
Leonard Curtis will get in touch with former clients and creditors within 10 working days from the appointment date.
