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February 22, 2024

FSCS declares Hartley Pension in default to pay compensation for exit charges

The Financial Services Compensation Scheme has declared Hartley Pensions in default in order to pay compensation on clients’ exit charges.

The FSCS announced on 21 February 2024 that the pension provider had failed and that FSCS had finalised an agreement with the Joint Administrators.

This agreement allows compensation to be paid for the benefit of Hartley SIPP Clients in respect of costs for the exit strategy.

Although Hartley Pensions is in default, at present, the FSCS says it’s not accepting individual claims against Hartley’s in respect of other matters.

How will the FSCS compensation payment for Hartley SIPP clients work?

According to the FSCS, under the agreement, it will compensate Hartley SIPP customers by funding the costs of the Joint Administrators’ exit strategy.

The FSCS has paid the compensation into a trust account which the Joint Administrators will use for this purpose.

This means the Joint Administrators no longer need to charge SIPP members the Exit and Administration Charge that it originally proposed.

The FSCS says the funding it’s provided “will allow time for the Joint Administrators to implement an exit strategy which includes transferring SIPPs to new providers.”

It advised customers that compensation is only being paid to address the costs of completing the Joint Administrator’s exit strategy.

FSCS said “We understand that the annual management charge will continue to be taken by Hartley to cover the day-to-day management of the SIPPs.”

Clients do not need to make an application to the FSCS for this compensation.

What was the Exit and Administration Charge (EAC)?

The Administrators of Hartley Pensions, UHY Hacker Young, wanted to bring in an Exit and Administration Charge (EAC).

In January a spokesperson for UHY Hacker Young told FT Adviser: “Without additional finance from the government or regulatory bodies, the cost of resolving the problems found at Hartley does fall with the customers of Hartley.”

Initially the FSCS said it was not able to pay compensation to Hartley Pensions’ SIPP clients for the EAC.

However, at the end of last month (January 29), the FSCS did a U-turn on its initial decision and determined the EAC was protected under its rules.

What happens now for Hartley SIPP clients?

The FSCS has declared HartleyPensions in default, however this is only so it can pay compensation in respect of the exit strategy costs.

The FSCS says it will not be open to other claims for the time being as its priority is to work with the Joint Administrators on getting the transfer process underway.

It assured customers that there will be an opportunity for them to raise claims against Hartley’s with involve other matters.

Hartley’s SIPP members do not need to do anything at this time.

Important Information!

You are not required to use our services to pursue your claim. You can also seek further advice or shop around subject to any time limits within which a claim must be made.

It is possible for you to present the claim for free, either to the firm or person against whom you wish to complain or to the statutory ombudsman (Financial Ombudsman Service or Pension Ombudsman Service) or the Financial Services Compensation Scheme, whichever is applicable to your claim.