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FCA in question over £1.3bn Sipp provider collapse

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Was there insufficient oversight of Hartley Pensions? The collapse of Hartley Pensions, known for rescuing troubled Sipp providers, has raised concerns about FCA supervision. Over 16,000 clients' Sipps have been in limbo for 2.5 years, prompting questions about FCA's actions.

Between 2018 and 2020, Hartley acquired the Sipp books of five troubled providers, which contained failed unregulated investments. Problems emerged after the acquisitions, including unknown fees being collected and requests not being actioned. The FCA placed asset retention restrictions on Hartley, and it was later stopped from taking on new business. In July 2022, UHY Hacker Young was appointed as its administrator at the request of the FCA due to serious operational, financial, and regulatory issues. Subsequent reporting by UHY Hacker Young showed incomplete records and transactions suggestive of personal spending in the company's records, deterring over 30 potential buyers.

The question of supervision

Four years passed between Hartley’s first Sipp book acquisition and the FCA’s move to apply restrictions on its business. 

This length of time raises questions about the FCA’s supervision process, and whether it was properly monitoring the serial Sipp acquirer, according to Chris Jones, director at Rock Consultancy, a consulting firm. 

The FCA was aware of what Hartley was doing. In a 2018 letter to Sipp provider CEOs, the FCA referenced a High Court judgement against Berkeley Burke, whose Sipp book would soon be Hartley’s first acquisition.

The letter also reminded Sipp firms that they were expected to disclose ‘if a firm is proposing to sell all or a significant part of its business to another firm’. 

It is important to note here that the acquisition of a Sipp book of business is not subject to FCA approval unless it is for the business's equity which these deals were not. 

But given the distressed nature of the acquired Sipps, it is not unreasonable to expect close FCA supervision of Hartley. And the letter referenced above shows the regulator knew - and wanted to be informed of - Sipp book transfers where a distressed firm was involved.

The extent of the FCA’s supervision of Hartley is ultimately unclear. In a statement to NMA, a spokesperson said the regulator ‘moved to protect [Hartley’s] customers as soon as we found issues with Hartley’. 

Loans under investigation

The collapse of Hartley has revealed serious oversight by the FCA and raised concerns about its regulatory scrutiny. The company's parent company, Wilton, owes over £3 million in loans to Hartley, adding to the complexity of its collapse. The FCA's tougher stance on Sipp providers is acknowledged, but some feel it's not enough. The full impact of Hartley's collapse cannot be ignored, and better oversight by the regulator could have prevented this situation.

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