A UK court has ordered Sipp firm Berkeley Burke to reimburse its clients and pay for the court proceedings brought forward by them.
The pay-out is of nearly £1m ($1.21m, €1.08m), the court said.
Berkeley Burke got into troubled waters after making high-risk unregulated investments which were accepted into the firm’s Sipps.
Some of the investors lost all of their money, however, it is not clear whether the Sipp provider will be able to pay back its customers.
Laura Robinson, senior associate and Clarke Willmott Solicitors, said: “It’s possible that the firm may slip into insolvency in light of the £1m costs order it now faces.
“Were that to happen, it seems likely that the industry would pick up the bill and hundreds of those who lost out will be once more restricted to the compensation available from the Financial Services Compensation Scheme.”
The case
Berkeley was held to account by the Financial Ombudsman Service (FOS) for “failing to act in accordance with the high-level principles expected of them”, especially regarding the lack of due diligence and treating customers fairly.
But the Sipp provider challenged the FOS’ decision through judicial review, questioning the Ombudsman’s ability to make such decision.
The court agreed with the FOS, but Berkeley appealed, and the case is due to be heard on 15 and 16 October 2019.
“Will this appeal now go ahead? If Berkeley Burke does slip into insolvency, almost certainly not,” Robinson added.
“Of course, if the appeal falls away, the court’s decision at first instance will stand unless or until there is any superior authority.”
