The SIPP provider Hartley Pensions Limited has entered administration due to operational and regulatory issues flagged by the FCA (Financial Conduct Authority).
This has led to the appointment of Administrators, Peter Kubik and Brian Johnson from UHY Hacker Young LLP, to manage the administration of the company.
Key Points for Hartley Pensions Customers to Understand:
- Current Status: Hartley is in administration, managed by appointed Administrators.
- Purpose of Administration: Administrators aim to transfer SIPP clients to new providers to protect their interests.
- Effect of Liquidation: Liquidation of Hartley as a business would impose a de-registration tax charge, impacting all SIPP clients negatively, therefore customers need to transfer to a new SIPP provider.
- Transfer Process: Clients cannot currently transfer holdings due to ongoing court proceedings and the implementation of an ‘exit and administration charge’ (EAC).
- Court Application: A court date of 29 February and 1 March 2024 has been set to decide on the EAC model.
- Charge Models: The proposed EAC may be a fixed fee or a hybrid model based on asset types. This is expected to impact all customers with SIPP accounts.
- Client Engagement: FS Legal is representing affected account holders and urges them to register on a portal to voice opinions and consider voluntary funding for legal representation.
- Timeframe: The transfer process is expected to take about 12 months, with clients potentially transferred to new operators by February 2025.
- Client Choice: Clients will have the opportunity to choose their new provider. They can also choose to speak to a financial adviser for advice on the transfer – this is where SIPP Advice can help.
- Jan 29th 2024 update from the FSCS: The FSCS has announced that they will now provide compensation to SIPP holders facing the EAC charge, despite previously not agreeing to it. This is great news for account holders, and although it’s not possible to make a claim yet, the FSCS will announce further updates when they’ve made their assessments and calculations.
What Clients Can Do:
- Engage: Register on the portal provided by FS Legal to access information and participate in discussions.
- Consider Voluntary Funding: While not obligatory, voluntary funding is sought to support legal representation for clients’ interests.
- Stay Informed: Regularly check updates from the Administrators and legal representatives for progress.
- Speak to us at SIPP Advice: If you want to speak to a specialist financial adviser familiar with the case, please book a free consultation below to understand how we can help.
Understanding Regulatory Safeguards for SIPP Account Holders
Self-Invested Personal Pensions (SIPPs) operate under stringent regulations overseen by the Financial Conduct Authority (FCA). These regulations are designed to ensure the protection of investors’ interests and funds within SIPPs.
One of the key safety measures for SIPP account holders is the presence of the Financial Services Compensation Scheme (FSCS).
This scheme provides a safety net by offering protection up to £85,000 per person per firm in the event of a SIPP provider’s insolvency. However, it is currently unclear as to whether the FSCS will be able to compensate investors for the EAC charge for transferring their SIPPs.
But also, the corporate structure of SIPP providers involves a critical safeguard for investors: the segregation of account holders’ funds from the SIPP provider’s business finances.
SIPP account holders’ money is held within separate trustee accounts distinct from the operational funds of the SIPP provider.
This ‘ring-fencing’ ensures that investors’ funds are isolated from the provider’s business assets and cannot be utilised for company operations, shareholder payouts, or other business-related purposes during liquidation.
Despite these safeguards, Hartley has ended up in the situation whereby it is understood to have a financial deficit of around £39-40 million. It therefore cannot afford to pay staff to help transfer away pensions to other providers, and the firm administrators are not capable of doing so.
This is why the Exit and Administration Charge (EAC) is being floated as a possible option to provide funds to pay for staff to implement SIPP account transfers away to new providers. This is currently deemed the most suitable option by the administrators.
Paying an EAC is essentially voluntary, albeit on a mass participation basis. This option is not opt in/opt out for individual account holders. It either takes place across all accounts or not at all, as this is seemingly deemed the fairest way to provide funds from customers.
You can learn more here: Are SIPPs Safe?
How SIPP Advice Can Help
As a business with links to an FCA regulated advice service specialising in Self-Invested Personal Pensions (SIPPs), our service provides comprehensive support and guidance to clients impacted by the administration of Hartley Pensions Limited.
Our Service Includes:
- Recommendation of New SIPP Providers: Once the transfer process becomes viable, we can recommend suitable new SIPP providers aligned with your financial objectives and preferences. We consider various factors, including fee structures, investment options, and drawdown options.
- Assistance with the Transfer Process: We can facilitate and streamline the transfer process, guiding you through the necessary steps and paperwork required for moving your SIPP holdings to the recommended new provider. We ensure a smooth transition, minimising disruptions to your pension investments.
- Investment Advice within the New SIPP: SIPP Advice offers personalised investment advice tailored to your risk tolerance, investment goals, and financial situation. We provide insights into suitable investment options available within the new SIPP, helping you make informed decisions aligned with your objectives.
- Retirement Planning Recommendations: Our advisory service extends beyond the immediate transfer process. We offer comprehensive retirement planning advice, considering factors like contribution levels, retirement age, and investment strategies to optimise your pension fund for a comfortable retirement.
- Drawdown Advice for Retirement: For individuals at the stage of retiring and considering drawing an income from their SIPP, SIPP Advice provides guidance on drawdown strategies. We help you navigate income withdrawal methods, tax implications, and sustainable withdrawal rates to ensure a well-managed retirement income.
The goal is to empower clients with tailored, expert advice to navigate the complexities associated with SIPPs, especially during challenging times like the Hartley Pensions Limited administration.
For personalised assistance or further information regarding our services, please don’t hesitate to contact us.