The Financial Services Compensation Scheme has paid out £53m in claims against IFA's in relation to pension transfer advice.
The lifeboat scheme have stated that to date it has paid £52m for the 1,385 claims made against IFA's who advised clients to transfer their pension into a Berkeley Burke SIPP.
After the transfers, the clients had their pension funds placed into a high-risk non-standard investment, many of which have become illiquid.
According to the lifeboat fund, the FSCS have already assessed and paid out a number of claims which were made against IFA's that are already in default by the FSCS. In relation to the advice received to transfer their pension to a Berkeley Burke SIPP.
On the 19th September, the FSCS announced they would be accepting claims against the firm after the SIPP provider went into administration. Berkeley Burke SIPP Administration Limited went into administration due to the inability to cover the financial costs of defending claims made against it in relation to due diligence failings when accepting high risk investments.
The Administrators appointed (RSM) immediately announced that the SIPP business would be bought out of administration by Hartley pensions in a pre-pack deal.
The FSCS has started to accept claims against the provider itself but will not pass these on to its claims processing teams for assessment before it has established whether they are in fact eligible, meaning the firm owes a civil liability to its customers.
Neil Stockdale, partner and head of financial litigation at Hugh James Solicitors, said he has started to contact clients to handle and claims that arise against Berkeley Burke.
Mr Stockdale said: "We are writing to our clients to provide detailed advice on the implications of this development. We represent a large group of investors and will see seeking to ensure that their interests are fully protected.
"We will now be handling FSCS claims and liaising with the Financial Ombudsman Service as well the FCA."
He added: "I am very concerned to ensure that the FSCS deals with these cases promptly and pays compensation that properly reflects the values of lost pensions.
"We will also be pressing the FSCS to confirm that it will offer to take assignments of the SIPP investments as this will enable our clients to finally close their SIPP's and avoid paying any further fees."
Even though the investments in the SIPP's are illiquid, the investment contracts still exist, Mr Stockdale explained.
This means that the investment will need to be removed from the SIPP in order to close it and stop fees incurring.
The FSCS needs to allow the investment to come out of the SIPP to ensure it closes.
The information in this article was sourced from: https://www.ftadviser.com/pensions/2019/09/23/fscs-pays-out-53m-on-berkeley-burke-claims/?utm_campaign=FTAdviser+news&utm_source=emailCampaign&utm_medium=email&utm_content=