The Financial Services Compensation Scheme (FSCS) has received more than 700 claims against Berkeley Burke SIPP Administration (BBSA).
The lifeboat fund said it was in the early stages of its investigations of the firm and could not say how much it expects to pay in compensation. However, the firm’s administrators RSM Restructuring Advisory projected the business was facing potential claim liabilities from clients of £158m or more.
If RSM’s claims liability figure is correct, BBSA will singlehandedly cost the FSCS more than the total it paid for all SIPP-related claims in its 2018/18 financial year, which stood at £123m.
The FSCS said the claims would not immediately be passed to its claim processing team because it first needs to establish if there are protected claims and if BBSA owes a civil liability in connection with a regulated activity to its customers.
So far, the lifeboat fund has paid out £54m for approximately 1,400 claims against advisers in relation to advice customers received to transfer their pension into a Berkeley Burke self-invested personal pension (SIPP).
The embattled SIPP administrator fell into administration in September after it was unable to pay a £1m interim costs ruling made by the High Court earlier this year.
BBSL had been fighting a Financial Ombudsman Service (FOS) decision that ruled it had to compensate a client after it failed to carry out appropriate due diligence on their investment. In February, the firm was granted leave to appeal the judgment delivered against it in October 2018, which rejected Berkeley Burke’s claim against the FOS decision.
Berkeley Burke had argued it carried out the due diligence expected of it at the time, according to Conduct of Business Sourcebook (COBS) rules, and that the FOS subsequently placed undue responsibility by applying FCA Principles 2 and 6 in a way that created a new and unexpected duty of care on the part of SIPP operators.