WEALTH management experts Mattioli Woods today welcomed the decision of an independent body which could pave the way for compensation pay-outs to scores of investors in a company’s failed self-invested personal pensions.
Today’s ruling by the Financial Services Compensation Scheme (FSCS) could signal significant settlements for former clients of Stadia Trustees, which was forced to cease accepting new business when it varied its regulatory permissions in 2013.
After working closely with the Financial Conduct Authority (FCA), Mattioli Woods was appointed to assist Stadia Trustees and, as part of the move, secured members’ benefits by transferring their assets to alternative pension arrangements.
Around 1,000 individuals were involved in the switch to Mattioli Woods. The company estimated as many as 80 per cent had some element of exposure to non-standard assets, with more than half having all of their pension funds invested in these.
Mattioli Woods believes the FSCS arrived at today’s decision as a result of Stadia not carrying out sufficient levels of due diligence before accepting pension transfers which were then invested into high risk non-standard investments.
Chief operating officer Mark Smith said today: “Some members have had to endure an extended period of uncertainty about whether their pension assets were ever going to have any value.
“We are delighted that this arrangement will enable them to get back some or all of the money they have lost as a result of the transfer of their pension benefits from other existing pension arrangements to high-risk investments”.
But Mr Smith warned members who stand to receive compensation from the FSCS to be wary of claim management companies who may try to cash in on the pay-outs.
He explained: “The FSCS has made it clear that for individual members of these SIPPs, they will contact them directly without the need for members to engage with a claim management firm. That way, members will get all the compensation they are entitled to without paying someone else’s fees. We will continue to work closely with FSCS and the members whilst they complete this process ”.
Mr Smith also felt there might be wider ramifications for SIPP providers across the sector, some of whom would need to take a close look at portfolios holding non-standard investments.
“A number have accepted new business without great concern over where it came from,” he said. “As a SIPP provider you still have responsibility for the pension transfers you accept and the assets that members hold. As a result of the FSCS announcement, we expect to see that claims they have been pushing back for a while will now have to be dealt with”.
Announcing the ruling on Stadia and two other SIPP operators today, FSCS chief executive Mark Neale said: “The FSCS steps in to protect consumers around the UK when authorised financial services firms fail. We are satisfied in these cases that certain claims are eligible for compensation, and expect to receive more claims of this nature in the coming months.
“We will be getting in touch with customers of these firms as we may be able to help.”