Hartley pension savers to face charge for it going into administration

[ursaminortaur]

Administrators capped withdrawals from pensions in payment from Hartley after it went into administration as they calculate an "exit and administrative charge" to be levied against client's pension pots.

https://12ft.io/proxy?q=https%3A%2F%2Fwww.telegraph.co.uk%2Fpensions-retirement%2Fnews%2Fmy-pension-was-capped-at-1000-a-month%2F

Mrs Pengelly’s pension is tied up in a Small self-administered scheme (SSAS) administered by Hartley Pensions. Also a Self-invested personal pension (Sipp) operator, Hartley went into administration in August 2022.

There are 17,000 savers with investments in Hartley, all of whom were hit with the £1,000 a month limit, right in the middle of a cost-of-living crisis. Thousands may have been in regular drawdown and reliant on that income just to get by.

After The Telegraph contacted Hartley's administrator, UHY Hacker Young, it removed the restriction on monthly withdrawals.

The accountancy firm said that the reason it limited payments was in order to calculate an “exit and administration charge” that will be levied against the savers.

The administrators are currently preparing a court application for an exit and administration charge to be approved, according to a letter seen by The Telegraph. If approved, this could see money taken from clients’ pension pots to foot the administration bill.

As I recall this isn't the first time administrators have sought to get their paws on the supposedly ring-fenced client money but in that case the FCA covered the costs so that clients didn't lose out. It will be interesting to see whether that happens again this time.

[BullDog]

Sadly, there's only one set of people who can pay. The clients of the failed company. It's not nice or just. But there's nobody else who can pay.

A good reason for having your account with one of the very big players who are perhaps less likely to land clients in that predicament.

[mc2fool]

As I recall this isn't the first time administrators have sought to get their paws on the supposedly ring-fenced client money but in that case the FCA covered the costs so that clients didn't lose out. It will be interesting to see whether that happens again this time.

Sadly, there's only one set of people who can pay. The clients of the failed company. It's not nice or just. But there's nobody else who can pay.

As ursa almost correctly says the FSCS coughed up the administration costs when Beaufort Securities went under:

"FSCS will enter into an agreement with PwC to meet the shortfall arising from PwC's costs for eligible clients. FSCS will arrange for these costs to be met directly with PwC. This will mean that the costs will not need to be taken from client assets and client money."
https://www.fscs.org.uk/making-a-claim/failed-firms/beaufort/

And SVS too:

"Under the terms of the distribution plan, approved by court order on 7 May 2020, FSCS is committed to meeting the costs of the Special Administration on behalf of all eligible claimants up to £85,000."
https://www.fscs.org.uk/making-a-claim/failed-firms/svs/

I see the FCA is already pointing clients at the FOS and FSCS. https://register.fca.org.uk/s/firm?id=001b000003IL376AAD

Whether the same rules and approach will apply to Hartley we'll have to wait to see, but the FSCS has already put up a page about Hartley, although it's very much an "on hold" one. https://www.fscs.org.uk/making-a-claim/failed-firms/hartley-pensions/

[ursaminortaur]

As I recall this isn't the first time administrators have sought to get their paws on the supposedly ring-fenced client money but in that case the FCA covered the costs so that clients didn't lose out. It will be interesting to see whether that happens again this time.

Sadly, there's only one set of people who can pay. The clients of the failed company. It's not nice or just. But there's nobody else who can pay.

As ursa almost correctly says the FSCS coughed up the administration costs when Beaufort Securities went under:

"FSCS will enter into an agreement with PwC to meet the shortfall arising from PwC's costs for eligible clients. FSCS will arrange for these costs to be met directly with PwC. This will mean that the costs will not need to be taken from client assets and client money."
https://www.fscs.org.uk/making-a-claim/failed-firms/beaufort/

And SVS too:

"Under the terms of the distribution plan, approved by court order on 7 May 2020, FSCS is committed to meeting the costs of the Special Administration on behalf of all eligible claimants up to £85,000."
https://www.fscs.org.uk/making-a-claim/failed-firms/svs/

I see the FCA is already pointing clients at the FOS and FSCS. https://register.fca.org.uk/s/firm?id=001b000003IL376AAD

Whether the same rules and approach will apply to Hartley we'll have to wait to see, but the FSCS has already put up a page about Hartley, although it's very much an "on hold" one. https://www.fscs.org.uk/making-a-claim/failed-firms/hartley-pensions/

Thanks for the minor correction as to who met the admin cost shortfall in the Beaufort Securities and SVS cases.

[yorkshirelad1]

There's the item in today's print Torygraph (Sat 29 April 2023) re Hartley Pensions
https://www.telegraph.co.uk/pensions-retirement/news/my-pension-was-capped-at-1000-a-month/
which I hadn't been following and was about to post on TLF then found this thread.

Personally I shudder, and remember echoes of Beaufort and SVS, as noted above, where professional (e.g. liquidators or insolvency) fees might be deducted from client assets (notwithstanding the FSCS).
The moral of the story is: if you think your assets are safe with a financial adviser, because they use words like "ring-fenced" (so beloved of stockbrokers and their nominees, but which has, funnily enough, recently, not been appearing so much!), think again, and make arrangements not to have all your eggs in one basket (noting the inevitable question, how many baskets?). Hopefully, lightning does not strike, but if it does, it doesn't knock out all your pots.