Hartley Pensions in default as £36m in exit costs loom

The Financial Services Compensation Scheme (FSCS) has declared SIPP and SSAS provider Hartley Pensions in default.

The compensation body said it had placed Hartley in default in order to be able to pay compensation to ex-clients for exit charges.

In January the body confirmed 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 do this.

The U-turn came about after the FSCS, “obtained and considered further evidence,” it said.

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 Hartley administrators UHY Hacker Young.

In December 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 £36m costs could have impaired the compensation and other payments eventually paid to Hartley clients.

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.