SIPP supplier in default after almost 500 claims

SIPP supplier DAC Pensions – which had greater than 600 shoppers and almost £27m in belongings beneath administration – has been declared in default by the FSCS, opening the door to compensation claims.

The FSCS stated it had obtained 482 claims in opposition to 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 shoppers and administered belongings of £26.7m, in keeping with a supervisory discover revealed by the regulator.

The FCA stated the DAC Pensions, authorised by the FCA since September 2017, failed to hold out satisfactory due diligence checks on two introducer companies previous to accepting enterprise from them.

This meant that the agency did not establish whether or not the introducers had the suitable FCA permissions to supply non-insurance-based pension recommendation.

The agency accepted roughly 620 new shoppers 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 stated that on account of accepting the enterprise from the introducers, DAC Pensions’ prospects had been directed to speculate their SIPPs in high-risk, illiquid investments by means of a mannequin portfolio operated by the 2 introducer companies.

Quite a few these investments had been unregulated collective funding schemes (“UCIS”) primarily based abroad which had been unlikely to be appropriate for retail shoppers.

Quite a few these UCIS have since been unable to satisfy redemption requests for a big interval with out clarification. The redemption points had been additionally not communicated to prospects in a well timed method. The regulator warned in 2021 that it expects prospects could lose “some or all the cash” they’ve invested into these UCIS.

The FCA additionally reprimanded DAC Pensions for failing to put in writing to prospects to completely inform them of the scenario and current them with all attainable grievance choices.

The FSCS apologised to prospects of the agency that intensive investigations into the corporate had been taking longer than anticipated.

In February this yr 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.