SIPP supplier DAC Pensions – which had greater than 600 purchasers and almost £27m in belongings beneath administration – has been declared in default by the FSCS, opening the door to compensation claims.
The FSCS mentioned it had acquired 482 claims towards DAC Pensions (FRN 774721), all related to SIPPs.
Thus far, 4 of the claims have been unsuccessful however the first one has been upheld which has triggered the default being declared yesterday.
A declaration of default by the FSCS opens the door to compensation claims which the supplier can’t pay.
The FCA ordered the Cambridgeshire-based SIPP supplier to be positioned into insolvency in August 2021 after the agency accepted enterprise from unauthorised introducers with out the correct vetting required by the FCA.
The agency had 607 purchasers and administered belongings of £26.7m, in line with a supervisory discover revealed by the regulator.
The FCA mentioned the DAC Pensions, authorised by the FCA since September 2017, failed to hold out ample due diligence checks on two introducer corporations previous to accepting enterprise from them.
This meant that the agency didn’t establish whether or not the introducers had the suitable FCA permissions to supply non-insurance-based pension recommendation.
The agency accepted roughly 620 new purchasers with belongings beneath administration of £20.4m from introducers primarily based in Eire and Cyprus. The introducers had been ‘passporting’ into the UK on the time.
The FCA added that DAC Pensions additionally accepted enterprise from one introducer regardless of being “explicitly knowledgeable” that it lacked the suitable permissions to supply pension recommendation.
The regulator mentioned that because of accepting the enterprise from the introducers, DAC Pensions’ clients had been directed to take a position their SIPPs in high-risk, illiquid investments by way of a mannequin portfolio operated by the 2 introducer corporations.
A lot of these investments had been unregulated collective funding schemes (“UCIS”) primarily based abroad which had been unlikely to be appropriate for retail purchasers.
A lot of these UCIS have since been unable to fulfill redemption requests for a big interval with out clarification. The redemption points had been additionally not communicated to clients in a well timed method. The regulator warned in 2021 that it expects clients might lose “some or all the cash” they’ve invested into these UCIS.
The FCA additionally reprimanded DAC Pensions for failing to jot down to clients to totally inform them of the state of affairs and current them with all doable grievance choices.
The FSCS apologised to clients of the agency that in depth investigations into the corporate had been taking longer than anticipated.
In February this 12 months the FSCS accomplished its investigations into DAC Pensions. Its investigations had been primarily targeted on introducer due diligence undertaken by DAC, previous to accepting enterprise from Elliot Lloyd Worldwide (previously Walker Murray) primarily based in Eire, and Woodbrook primarily based in Cyprus.
