The administrators of UK Sipp provider Berkeley Burke have decided not to go through with the firm’s appeal against a judicial review.
The company entered administration in September 2019 and was sold to Hartley Pensions on the same day.
The appeal refers to a 2014 Financial Ombudsman Service’s (FOS) decision which ordered Berkeley Burke to pay redress to its clients.
The Sipp provider did not carry out due diligence before accepting non-standard investments, the FOS found.
But in 2017, the firm disputed the Ombudsman decision through a judicial review, which was also unsuccessful.
As it prepared for the second appeal, Berkeley Burke was forced to enter administration as it could not afford the £1m ($1.23m, €1.12m) needed to defend regress claims made against it.
Drop the case
RSM Restructuring Advisory, the firm handling the administration process, said: “The joint administrators recognise the wider interest in this appeal from across the Sipp industry.
“However, the joint administrators’ primary responsibility is towards the company’s creditors, and the safeguarding of the funds from the estate for the benefit of the creditors.
“Having considered the position in detail with their professional advisers, the joint administrators have resolved not to continue with the appeal of the judicial review.”
A word from the regulator
The Financial Conduct Authority (FCA) commented on the matter as well, emphasising the need to prioritise firms’ duties to their creditors.
“We reiterate that if the outcome of this case calls into question a Sipp operator’s ability to meet financial commitments as they fall due, they should contact the FCA immediately. We also remind firms of their obligations to treat complainants fairly and handle complaints according to the rules,” the FCA said.
“Where a firm receives an ombudsman decision, it should consider whether it ought to act with regard to the position of customers who may have suffered detriment from, or been potentially disadvantaged by, such problems but who have not complained and, if so, take appropriate and proportionate measures to ensure that those customers are given appropriate redress or a proper opportunity to obtain it.
“If a firm pursues a sale of part or all of its business or assets, it should pay due regard to its implications for customers who may have compensation claims.
“We expect all directors to comply with their statutory and non-statutory duties. These include, where a firm is at risk of insolvency, their duties to creditors, such as customers to whom compensation is or may be due.”
