The letter details what the FSCS does and how it works. It says: “The service we offer is free and we do not charge individual consumers for dealing with claims. You will be able to apply direct and do not need to use any representative or claims management company to whom fees may be payable from any compensation due to you.”
Knowledge Is Vital
Whilst we always tell clients that they can make a claim directly, I am worried that clients might have their claims rejected because they are not aware of the specific legal issues.
I have worked on a number of cases which were either made by the client directly, or by a solicitor who should have known better, and were refused by the FSCS but were then upheld on review when I submitted further arguments.
We have had three clients who had been told a case could be submitted to the FSCS by the SIPP provider only to find out that an IFA firm which is still trading provided advice.
The FSCS only pays out as a last resort when all avenues have been exhausted and due to time limitation issues a delay in submitting the complaint to the relevant firm could lead to the client losing out.
Compensation Payments
I am also surprised by the comments made by Heritage, explaining that the FSCS will only pay the compensation into a SIPP and if the customer is asking for a payment into their personal bank account it would be classified as an unauthorised pension payment!
The FSCS pays clients directly – it is a compensation payment and not a pension payment. It is worrying that firms neither regulated to give claims management nor pension switching advice are offering to facilitate those transactions.
Prepare Your Case
I am also concerned that, while the FSCS says that the claimant doesn’t need to use a claims manager or solicitor, which is perfectly correct, it simultaneously omits to make any mention of legal issues and difficulties that can and may arise with claims against SIPPs, which any person without the relevant knowledge will simply not be aware of.
The FSCS inviting such claims will make them be perceived as actively supporting the investing public, but there is a strong possibility that these claims will be rejected because they have not been prepared, presented and argued correctly.
The FSCS declared that claims against Brooklands Trustees, Stadia Trustees, and Montpelier Pension Administration Services may be eligible for compensation and it is now accepting claims against the Lifetime SIPP.
The FSCS has received around 150 claims for compensation relating to the former three businesses. Those claims relate to how the businesses set up, operated and administered SIPPs through which people invested in Storage Pods, Oil Fields, Diamonds, Overseas Property and Farmland.