The FSCS are expected to receive £158m worth of claims since the Berkeley Burke collapse
Since the collapse of Berkeley Burke SIPP Administration Limited, the FSCS could end up paying out £158m worth of claims.
In a statement of administrators proposal, administrator Adrian Allen said that it was likely they FSCS would pay the claims that are valid, which could total "up to £158m or more."
Mr Allen also stated that Berkeley Burke's SIPP arm was facing more than 800 complaints outstanding at the FOS (Financial Ombudsman Service) alongside claims from a group litigation court action of 28 clients, when it went into administration on 19th September 2019.
The FOS complaints make up about £150m of the claims against Berkeley Burke while the court action is expected to total £8m, according to the report.
RSM, the company appointed as administrators, immediately announced the SIPP arm of the business would be sold out of administration in a pre-pack deal with Hartley Pensions.
Hartley Pensions did not take on liability for the outstanding claims against the Berkeley Burke SIPP arm, meaning the claims would land at the FSCS.
Clients of Berkeley Burke have since been told to direct their claims to the FSCS in the first instance and those who are not eligible to claim through the FSCS, mainly non-personal clients, were directed to submit their claims to the administrators.
Mr Allen reported: "In practice, it is likely the FSCS would pay valid client claims, of up to £85,000 per client, and then stand in the place of those clients with a subrogated claim against the company.
"The FSCS has been kept regularly and fully informed on developments in relation to the sale process... and are supportive of the strategy adopted."
This means the FSCS is likely to bail the clients out then claim against the company to cover those expenses.
After it emerged the company's SIPP arm has entered administration, advisers were frustrated they would end up footing the bill through their FSCS levy, claiming it had become too easy to pass on liabilities to the lifeboat scheme.
Berkeley Burke went into administration because it was unable to cover the financial costs of defending claims made against it in respect of the company's alleged due diligence failings when accepting high risk investments between 2010 and 2012.
The SIPP provider was embroiled in a case from 2014, in which the FOS ruled it has to compensate a client after it failed to carry out adviser-style due diligence on his investment, but has since dropped the appeal after failing to get sufficient backing to cover the potential cost.
The Berkeley Burke group has no ties to the now defunct SIPP business and no other companies within the group are affected.
If you have been affected by the failure of Berkeley Burke's SIPP arm, please get in touch with us as we may be able to assist you with your case. Call The Claims Bureau on 01903868251.
Information in this article was sourced from: https://www.ftadviser.com/pensions/2019/11/19/berkeley-burke-case-to-land-158m-of-claims-at-fscs/?utm_campaign=FTAdviser+news&utm_source=emailCampaign&utm_medium=email&utm_content=