The End of the Road - Berkeley Burke administrators drop appeal case
The administrators of the Berkeley Burke Sipp have dropped the appeal case scheduled for this month, after failing to get sufficient backing to cover their potential cost.
Berkeley Burke, a former self-invested personal pension provider, was fighting a 2014 FOS decision which stated that it had to compensate a client after it failed to perform necessary due diligence on the client’s investment.
The investment revolved around an unregulated investment scheme, Sustainable Agro Energy, which sold plots of land in Cambodia where trees would be planted to create bio-fuel.
The client, Wayne Charlton, was out of pocket £29,000 after the scheme was found to be fraudulent. It had promised returns of between eight and nine percent.
Separate to Mr Charlton’s claim, the embattled SIPP provider was also facing a claim from a group of over 177 investors, of which over 20 were Smooth Commercial clients, over losses they incurred from these high-risk investments. The investments ranged from forestry in Australia to holiday apartments in Grenada, a court document revealed.
Berkeley Burke initially contested, but their defence was thrown out earlier this year, after the firm wrote to Bristol Commercial Court on July 12th 2019 to confirm that it did not intend to comply with future directions in the group litigation given its continuing involvement and appeal of the judicial review proceedings in relation to Wayne Charlton’s case.
But in a statement last week (October 4th) the firm confirmed that this appeal, which was scheduled for two days in October, will not go ahead.
Berkley Burke said it had secured more than £100,000 from across the financial services industry to fund the case, which would have been "considerably more than enough to cover [BB Sipp Administration Limited's] costs for a two-day hearing".
But the funds would have been short of the "total potential legal costs" faced if the Sipp provider lost its appeal, it added.
The administrators said:
Having considered the position in detail with their professional advisers, the joint administrators have resolved not to continue with the appeal of the judicial review.
It will now fall to the Financial Services Compensation Scheme (FSCS) to compensate those who are out of pocket. Berkeley Burke Group - which now has no financial interest or ownership of Berkeley Burke SIPP Administration - felt there was a strong case for appeal to mitigate the costs on the FSCS.
FCA reiterates regulatory obligations of SIPP providers
Unsurprisingly, the FCA has again reminded SIPP providers of their regulatory and financial commitments following the news that Berkeley Burke SIPP Administration's court appeal will not go ahead.
This comes nearly 12 months to the day that the FCA wrote a damning “Dear CEO” letter to SIPP providers, in relation to the Berkeley Burke proceedings.
An update on the regulator's website said:
We reiterate that if the outcome of this case calls into question a SIPP operator's ability to meet financial commitments as they fall due, they should contact the FCA immediately.
We also remind firms of their obligations to treat complainants fairly and handle complaints according to the rules set out in the Dispute Resolution Handbook.
If a firm pursues a sale of part or all of its business or assets, it should pay due regard to its implications for customers who may have compensation claims.
We expect all directors, as well as complying with the relevant provisions of the FCA Handbook, to comply with their statutory and non-statutory duties. These include, where a firm is at risk of insolvency, their duties to creditors, such as customers to whom compensation is or may be due.
The FCA said in the event of any future regulatory applications from connected parties, it would take into account how those individuals acted in the context of the considerations outlined in its letter.
How can Smooth Commercial Law help?
At Smooth Commercial Law, our team of experts have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing more and more mis-sold SIPP claims, and have managed to secure compensation for many of our clients.
Should you have a claim, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.