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Mis-Sold SIPPs: Liberty SIPP Placed in Default with over 1,600 Mis-Selling Claims

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The SIPPs mis-selling scandal is an ongoing problem in the UK, with thousands of customers left out of pocket as a result. The good news is that some people are now receiving compensation for their financial losses.

It seems likely that those caught up in the Liberty SIPP situation may well be compensated soon, as the pension provider has now been declared in default. Here’s further information about the situation.

Liberty SIPPs – what happened?

Back in 2018, Liberty SIPP were performing well, with good profits and a high turnover of £2.9million (March 2018). At its peak, the company had over 13,000 customers, with combined assets valued at more than £3.5billion. In October 2018, it was sold to EBS Pensions Ltd, who are part of the Embark Group. At this point, the Liberty SIPP was given a new name – the Option SIPP.

On paper, things looked like they were going well. This made it all the more surprising when the complaints started rolling in. There are now 1,696 claims against the company, which relate either to the SIPP itself, or to the pension advice received. Liberty Sipp collapsed back in April 2020, due to the volume of complaints levelled against it.

The problem – and resolving the issue

Many of the complaints related to the high-risk nature of the SIPP investments, which meant that clients lost money as a result. Customers felt they weren’t warned about the risk, or given good advice regarding transferring their existing workplace pensions.

Now that Liberty Sipp has been declared in default, compensation can start to be paid out to affected investors. Administrators (Reynolds Porter Chamberlain) are handling the claims – a process that has proved challenging, as certain court cases, such as the Carey Pensions case, have been taking a long time to settle.

When will affected customers receive compensation?

The good news is that the FSCS (Financial Services Compensation Scheme) has officially declared Liberty SIPP in default, which means they will start to award compensation in the near future.

However, as it stands at present, there’s been no information on exactly how much compensation will be paid out, nor who will receive it. Liberty SIPP’s administrators issued a statement in December 2020, commenting: “At this stage we are not in a position to provide any guidance on how the FSCS will update its policies in light of both the rulings as to what compensation may or may not be paid. The decision remains with the FSCS and is currently ongoing.”

What to do if you’ve been mis-sold your SIPP

The following are classic signs of SIPP mis-selling:

  • The advisor didn’t explain the product / level of risk properly
  • They pressurised you into transferring your existing pension
  • They didn’t assess your lifestyle or your attitude to risk
  • They didn’t present you with a full list of options
  • They recommended a pension product that wasn’t suitable for your needs

If this sounds familiar, it might be time to make a claim. Get in touch with Goodwin Barrett today on 0808 163 1659 today or email enquiries@goodwinbarrett.co.uk to find out if you’re eligible to receive compensation.

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