The SIPP arm of Berkeley Burke fell into administration yesterday (18 September) but was immediately sold to provider Hartley SIPP.
A notice from the Financial Conduct Authority (FCA) said the firm entered administration because it could no longer afford to defend redress claims made against it. The claims are linked to the acceptance of high-risk non-standard investments into its non-advised SIPPs between 2010 and 2012.
Berkeley Burke SIPPs will be transferred to a new SIPP that has been established by Hartley. However, clients can choose to transfer their SIPP to another registered pension arrangement.
Last month, Hartley bought troubled provider GPC SIPP.
Why is the business in administration?
In 2017 the Financial Ombudsman Service found against Berkeley Burke 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.
The SIPP provider launched a judicial review of the Ombudsman decision but was unsuccessful.
In addition, it was facing similar claims from 28 customers through court action under a group litigation order (‘GLO’). While it was given leave to appeal the judicial review by the Court of Appeal, and it had planned to pursue a defence in the GLO, the costs of doing so were prohibitive.
Since Berkeley Burke could not afford to continue with the litigation and was facing significant potential claims, the directors resolved that they had no alternative but to place the company into administration, a statement from the FCA said.