The FSCS has received nearly 3,000 claims against 116 advice firms involved in recommending pension products from failed SIPP firm Rowanmoor.
The new figures reveal the scale of the problem caused by the failure of Rowanmoor Personal Pensions Limited (RPPL) which collapsed into administration this week after a flood of claims.
Most of the claims have now been passed to the Financial Services Compensation Scheme which deals with claims against failed regulated firms.
Complaints to the Financial Ombudsman Service about RPPL are also being passed to the FSCS.
In a statement to Financial Planning Today this week the FSCS revealed it has:
• Received 2,844 claims in total against 116 firms for their advice to transfer to, or take out, Rowanmoor pension products
• 2,400 of these claims have already been completed and upheld
• 278 claims have been rejected and 166 are in progress.
The figures underline the size of the Rowanmoor failure. Rowanmoor ran 4,800 pensions and had assets under administration of £1.4bn. It is one of a number of SIPP providers to be hit in the past 24 months by complaints over lack of due diligence when allowing sometimes high risk investments to be added to SIPPs.
The full cost of the failure of Rowanmoor Personal Pensions, one of the UK’s biggest SIPP providers, is not yet known but is likely to be substantial. The FSCS said the firm was still under investigation and had not yet been declared in default. It is likely that Rowanmoor will be declared in default with the costs of compensation shouldered by the industry through the FSCS levy.
Earlier this year the Financial Ombudsman Service issued a determination following a complaint by a Mr T. against Rowanmoor Pensions. The determination covered not just Mr T. but was relevant to the 1,387 SIPP investment holders quoted in the determination who had been clients of Rowanmoor.
Many of the cases involved the due diligence applied by Rowanmoor on investment sales by a regulated advice firm and an appointed rep working with the company. The advice firms recommended investments in a Cape Verde-based group to be included in clients’ SIPPs. However the new figures suggest many more advice firms were involved.
According to the FCA, RPPL received a number of complaints about “historic, high-risk, non-standard assets” and for not carrying out “adequate” due diligence before accepting these assets into customers’ SIPPs.
Following the string of complaints, RPPL sought professional advice about liabilities from existing and potential complaints. After the review, RPPL’s directors determined that the company was insolvent and should be placed into administration.
The administrators said that although RPPL has entered administration the pension scheme assets (including cash) are held in trust by Rowanmoor Trustees Limited (RTL), which has not entered administration.
The failure of Rowanmoor follows the recent failure of competitor Hartley Pensions, which also went into administration, and a string of other failures.
