FSCS to meet admin costs of Hartley Pensions collapse

The Financial Services Compensation Scheme has said that it will pay the exit and administration charge (EAC) that the joint administrators propose to levy on Hartley Pensions Limited (HPL) customers, despite earlier saying that it could not. The U-turn came about after the FSCS “obtained and considered further evidence,” the FSCS said. In a statement the FSCS said: “We’ve decided that this evidence is sufficient for FSCS to determine that the EAC can be protected under our rules.” The EAC is intended to cover costs, including the costs for customers to transfer to other regulated companies where possible, until Hartley’s administration is concluded. The costs are likely to be around £36m, according to the administrators UHY Hacker Young. It said: "The total costs to complete the transfer-out over the next 12-18 months are estimated by UHY Hacker Young to be approximately £36m. Under the proposed EAC, if the amount paid by clients is less than this then the balance will be repaid to them.” Last month the FSCS said that, “based on the available evidence at that time we could not protect SIPP members from this charge as we did not believe there was a protected claim under our rules.” Without the FSCS intervention the costs, likely to be substantial, could have impaired the compensation and other payments eventually paid to Hartley clients. The move was welcomed by the Financial Conduct Authority. It said: “We welcome this step as it will reduce the impact of the administration on SIPP customers. We will continue to engage with all parties to ensure the best outcomes for consumers.” Hartley Pensions was a SIPP operator authorised and regulated by the FCA. It also provided administration for a small number of Small Self-Administered Schemes, regulated by The Pensions Regulator. Hartley Pensions went into administration in July 2022 after several regulatory interventions and a failure to find a buyer. An estimated 16,000 clients were hit by the collapse. It had been subject to a number of FCA requirements in early 2022 due to, “serious operational, financial and regulatory issues.” As a result of the issues, the FCA requested that the firm go into an insolvency process in the interest of clients. The firm then sought professional insolvency advice and, as a result, a director determined that it was insolvent and took steps to place it into administration with Peter Kubik and Brian Johnson of UHY Hacker Young LLP appointed as joint administrators. In previous years, Hartley Pensions had acquired the client books of several failed SIPP providers. It bought the Guinness Mahon book in February 2020 after the firm collapsed. The deal meant the transfer of 4,000 SIPPs previously administered by GMTC which suffered a string of problems and legal actions from unhappy clients. Other SIPP books the firm acquired in recent years included GPC, Berkeley Burke SIPP and Greyfriars AM.

FSCS to meet admin costs of Hartley Pensions collapse

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