The troubled Sipp provider has entered administration joining a list of firms to collapse in recent months.
The Financial Conduct Authority (FCA) announced this week that Liberty Sipp has fallen into administration. They have stated that Andrew Poxon and Alex Cadwallader of Leonard Curtis have been appointed as joint administrators.
The news will come as no surprise to most, with Liberty Sipp dealing with a number of decisions against it from the Financial Ombudsman Service (FOS) since 2018.
In a statement, the FCA said:
Following a number of binding decisions from the FOS, the company was advised that it was insolvent based on the number of potential claims relating to high-risk non-standard investments. It was advised it should enter administration to provide protection for creditors including former customers
Now, hundreds of claims are expected to be picked up by the Financial Services Compensation Scheme (FSCS), with customers potentially receiving up to £85,000 in compensation if their claims are accepted.
Who were Liberty Sipp?
Liberty Sipp, which was formed in 2007, was a Self-Invested Personal Pension (SIPP) provider who made headlines after revelations of a lack of due diligence and mis-selling in relation to unregulated investments within their SIPP portfolio.
They used to administer around 12,800 Sipps, working with 745 advice firms across the UK, their accounts show.
Liberty Sipp had worked with an unregulated introducer called Avacade, which has been linked to a number of high-risk schemes. Often, the advice given to customers was to transfer their safe and secure pension into a Sipp, and then to invest into a number of unregulated, high-risk investment schemes such as Ethical Forestry or Global Plantations. Some of these investment schemes lost their customers most, if not all, of their investment.
In early 2018, a number of FOS claims were launched against Liberty Sipp over these unregulated investments. These claims were accepted by the FOS. Following this, Embark Group bought Liberty Sipp’s business and customer assets. However, the legal entity “Liberty Sipp Limited” was not part of this sale and retained its liabilities. It consequently had to pay out against any complaints using the assets it held.
At the time, Embark Group, who also owns brands including Rowanmoor and Hornbuckle, rebranding Liberty Sipp as the Option Sipp. Liberty Sipp falling into administration comes only 18 months after Embark Group acquired Liberty Sipp’s customer assets.
What happens now if I was a Liberty Sipp customer?
The fact that the FSCS are accepting claims against Liberty Sipp will be welcome news to its former customers. However, the scheme has said claims will not immediately be passed on to the claims processing team for assessment. The FSCS first need to ensure that there are protected claims against Liberty Sipp, meaning they need to determine that Liberty Sipp owes a civil liability to its customers that would enable them to sue the firm in court.
Currently, the FSCS is working closely with the firm’s administrators and is investigating Liberty Sipp’s working practices. They wish to establish what levels of due diligence were carried out by the firm before allowing customers to make specific investments under their pensions.
Generally speaking, it appears that there is a case for compensation against Liberty Sipp, with the FSCS stating that customers can receive up to £85,000 in compensation should their case be accepted.
How can Smooth Commercial help you if you have been affected?
At Smooth Commercial Law, our team of legal 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, much like Liberty Sipp, and have managed to secure compensation for many of our clients.
Should you have a claim against Liberty Sipp, 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.
You can contact our experienced team by calling *Ruler Number* or by emailing sb@smooth-commercial-law.co.uk