The FSCS will now step in to consider claims against BBSAL.
In August BBSAL was ordered to pay £1m to claimaints after losing a court case.
Yesterday (18 September), the directors of the FCA authorised firm, appointed Adrian Allen and Diana Frangou of RSM Restructuring Advisory LLP as joint administrators. Other companies in the Berkeley Burke Group are not affected.
The FCA said the firm was entering administration because “it can no longer afford to defend redress claims made against it.”
The claims relate to the firm’s acceptance of high-risk, non-standard investments (NSIs) into its non-advised SIPPs between 2010 and 2012.
Immediately following the administration the joint administrators sold the BBSAL SIPP business to Hartley Pensions Limited. The assets held within each BBSAL SIPP will transfer to a Hartley SIPP and be held for customers, unless they contact Hartley to say they wish to take up another option.
The Financial Services Compensation Scheme will now step in to assess claims against BBSAL but the FCA points out that eligible customers will only be able to bring claims against the FSCS up to the limit of £85,000.
Between 2010 and 2012, BBSAL accepted high-risk, non-standard investments (NSIs) into its non-advised SIPPs. In 2017 the Financial Ombudsman Service found against it in a complaint relating to the due diligence carried out before accepting one of these NSIs and ordered it to pay redress to the customer.
BBSAL launched a judicial review of the Ombudsman decision but was unsuccessful, said the FCA. In addition, it was facing similar claims from 28 customers through court action under a group litigation order.
BBSAL was unable to afford to continue with the litigation. With this in mind the directors decided the best option was for the firm to go into administration.
In October 2018, the FCA wrote to SIPP operators to “draw to their attention” to a number of pending civil claims in the High Court, together with the judgment handed down in the case of R (Berkeley Burke SIPP Administration Limited) v. Financial Ombudsman Service Limited.
These cases, at least in part, deal with SIPP operators’ due diligence obligations when accepting customers’ investments.
The FCA said in a statement: “Our messages to CEOs of SIPP operators remain valid.”