GPC SIPP enters administration after fighting Harlequin claims

Hannah Godfrey reports...

GPC SIPP has entered insolvency after fighting a raft of claims and complaints made against it in relation to investments in the Harlequin property scheme.

Administrators Smith & Williamson (S&W) have been appointed as joint administrators of the self-invested personal pension (SIPP) provider. GPC filed the appointment of administrators with the court on Tuesday (11 June) because it had become insolvent.

S&W said GPC has 2,700 SIPPs that are deemed to hold alternative investments in the Harlequin property scheme, all of which were placed between 2009 and 2012. In light of problems with those investments, the company has not marketed its services since 2013.

Harlequin took around £400m of mainly pension investors’ money to develop Caribbean villas. Advisers – or ‘agents’ – who sold Harlequin earned commissions of up to 15% of the investment. Ultimately, the villas were never built, and the investment is now worth nothing.

‘Multi-party action’

Some 141 SIPP plan members – all of whom have been compensated by the Financial Services Compensation Scheme (FSCS) – have brought a multi-party action against GPC, in which the Financial Conduct Authority is also looking to intervene. GPC is in the process of defending those claims.

A number of clients have also lodged complaints with the Financial Ombudsman Service and, according to S&W, there have been a number of adverse adjudications. It is in the process of contesting those complains.

Also according to S&W, GPC has experienced a “significant drain on resources” in dealing with claims and complaints in relation to alternative investments.

Lead joint administrator Adam Stephens said his firm’s objectives were to rescue the company as an going concern, achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up, and realise property in order to make a distribution to one or more secured or preferential creditors.

He added: “In line with these objectives, the joint administrators are continuing to trade the business while in ongoing discussions with a number of interested parties as part of our work to try to sell the company’s business as a going concern.

“Any interested parties should contact the company immediately. All existing employees have been retained as part of this process.”

FSCS ‘working closely’

Following the entry into administration the FSCS has revealed it is accepting claims against the firm.

The FSCS said it is “working closely” with GPC’s administrators and is investigating the practices of the firm. It said it was doing this to “establish what levels of due diligence were carried out by the firm, prior to permitting customers to make specific investments under their pensions”.

The lifeboat fund also said it was aware that many of GPC’s customers took advice from IFAs to transfer existing pensions into GPC’s SIPPs.

The FSCS added: “Following the pension transfer, customers had their pension funds placed in high-risk, non-standard investments, many of which have become illiquid. FSCS has already assessed and paid a number of claims made against IFAs already declared in default by FSCS, in relation to advice customers received to transfer their pension into a GPC SIPP.

“Although FSCS is accepting claims against GPC SIPP Limited, claims will not immediately be passed to our claims processing teams for individual assessment. Our first step is to be satisfied that GPC, due to its practices, is liable for customers’ losses.”