Hartley Pensions Limited (In Administration) – c.16,000 SIPP funds protected against £38m+ charge
The Case
The SIPP book held assets of c.£1.3bn (including c.£145m cash). Many members had previously received negligent investment advice and had sustained substantial—sometimes total—losses. Nonetheless, they faced ongoing demands for annual management charges from a succession of administrators.
Hartley entered administration in July 2022, after which its then appointed Joint Administrators suspended transfers to new SIPP operators and proposed an “Exit & Administration Charge” (EAC) be taken from SIPP assets. As set out in the Joint Administrators’ materials, the £38m figure included c.£10.9m for administrators’ fees and c.£17.9m for their solicitors, and some calculations referenced higher potential totals (up to c.£78m). The legal basis for such an EAC at all, or in the amount sought, was contested.
It was also unclear how any charge would be allocated between SIPPs, with some having no assets and others holding illiquid assets (e.g., commercial properties) which might require sale. The Joint Administrators further indicated potential personal exposure where assets proved insufficient and identified a risk of adverse HMRC consequences if the EAC were not implemented. Specialist tax counsel instructed by the Representatives did not accept that analysis and considered the tax risk materially overstated.
On advice from our lawyers, Counsel and insolvency and tax experts, the Representatives opposed the proposal to remove such substantial funds from pension assets.
The Joint Administrators then applied to have the Representatives replaced with new Representatives of their own choosing, two of whom were current or former employees of Hartley itself and all of whom it was stated had confirmed they would not oppose the EAC. It was also confirmed that the new legal team appointed to advise the New Representatives would only be paid from the EAC and only if the EAC was successfully levied against pension assets.
The Challenges
Multiple stakeholders were engaged, including the FCA and FSCS, alongside a very large and diverse member group. Operational restrictions and the paused transfer process created day-to-day issues (for example, lease renewals, insurance renewals and refinancing) and potential costs and losses for members while the Court process ran its course. The case attracted significant industry and national press interest.
How We Helped
We assembled a cross-disciplinary team (counsel, insolvency and tax specialists) and coordinated instructions from five nominated Representatives to ensure the members’ position was fully and fairly advanced.
When an application was made to replace the Representatives on the basis they could not afford to fund legal representation through to trial, we agreed to act on a “pro bono” basis so the Court would have the benefit of fully argued opposing submissions on the proposed EAC and to ensure members’ interests were represented.
The Outcome
Shortly before the hearing of the application to replace the Representatives of the SIPP holders, the FSCS confirmed—following receipt of further information—that it would meet the EAC. In light of that position, the Joint Administrators stayed and then discontinued the Part 8 claim. This removed the need to charge the proposed EAC to SIPP assets, protecting SIPP holders’ assets and allowing the transfer process to progress.
One Representative said:
“The firm has worked tirelessly to support myself as a proposed Representative Respondent (and by default 1,000’s of other pensioners) in our case against Hartley’s Pension Ltd (In administration).
If not for the efforts of FSL and their persistence …..1,000s of pensioners would have suffered further financial loss….
This was a classic case of a small specialist firm doing what was right, in spite of the odds,
As a final note I would like to thank Julia Norris personally for her commitment and dedication to this case. Ultimately Julia’s determination and long hours of work, delivered a result which in my opinion few others could have achieved."