Sipp firm Carey Pensions UK has told some members their Sipp will be transferred into a ‘distressed’ book of business which would include ‘members with illiquid non-standard assets'.
In its 2016 financial results the Sipp firm said it had faced a number of ‘complaints and legal cases’ which related to ‘investments into Sipps made on an execution only basis’.
A BBC You and Yours programme also reported last August that Carey Pensions has been making a number of settlement payments to investors who had brought forward Financial Ombudsman Service (FOS) complaints. These claims related to due diligence carried out on an unregulated introducer.
Now in an email seen by New Model Adviser®, Carey Pensions has told members with ‘uncertain’ investments it will be transferring them to another scheme, Carey Pension Scheme 2 Trust (CPS2).
‘The reason that we have decided to transfer your Sipp to the CPS2 Sipp trust is because your scheme contains investments that currently have little or no value due to them being in liquidation, they have a significantly reduced value or are in a state of uncertainty,’ the message says. ‘We therefore want a dedicated team to focus on monitoring and administering these distressed holdings within a single trust for you.’
Carey Pensions UK will administer CPS2 and there will be no charge for member transfers, the message adds.
The firm said if members do not want to switch to CPS2 they must contact it to say which other Sipp operator it wants to move to – however the members are warned your ‘chosen scheme may not accept an investment that is in a distressed state’.
Why move the members?
Carey Pensions remains the administrator for the new Sipp meaning any potential liabilities arising out of CPS2 will remain with the firm. However the decision to split the book up could be a precursor to a sale of the assets of the ‘good’ book according to a number of industry figures.
Chris Jones, the principal at Sipp consultancy business Rock Consultancy, said: ‘Separating the books in that way does mean the good quality book might be attractive to a purchaser.’
Julian Penniston-Hill, chief executive of Intelligent Money, said the separation could be part of a sale.
‘Segregating the books means they could look to sell the good book of business,’ he said.
However Christine Hallett, Carey’s chief executive, denied the move was a prelude to a sale.
‘It is not a precursor to selling the assets of CPS1. I have been in the Sipp industry many years and me and my team continue to be for many years to come so selling a book of business is not an option for us,’ she told New Model Adviser®.
When asked, Hallett would not disclose how many members are being moved to CPS2.
She said the decision was taken to make it easier for the firm’s technical and compliance team to administer these clients who had ‘illiquid non-standard assets’.
She added CPS2 was already in place from when the firm took over Rockingham Sipp in 2012.
‘It is simply easier for management reporting, work allocation, phone call allocation to have our systems updated to have members with a particular profile easily identifiable. We had decided to do it in this way as CPS2 was already available as it was the ex- Rockingham Sipp trust which we took over some years ago,’ she said.