21 August 2009
The Freedom SIPP, which is both the name of the product and the
firm selling it, closed to new business last year. This was
subsequent to the Financial Services Authority (FSA) issuing
Supervisory Notices in July and September 2008 after visits to the
firm.
At the time Freedom SIPP said: "During the recent visit by the
FSA it was agreed that certain additional administrative procedures
needed to be implemented. We have volunteered to accept no new
members until the changes required have been implemented. We will
keep you informed and, in the meantime, we can assure you that your
funds continue to be held as before."
However in a supervisory notice from 2008 recently made public
the FSA says: "We have concluded to exercise the power to vary your
permission in order to protect the interests of consumers or
potential consumers."
There was criticism from the FSA on Freedom transferring
customers into a new bank account without informing them that they
would lose the right to authorise future transfers.
Allegedly Freedom SIPP was found to have authorised loans from
clients' funds that are not permissible under HM Revenue &
Customs' rules. Freedom SIPP denies this.
The FSA stated: "Your actions may have led and may lead in the
future to consumer detriment, in that members' money may be drawn
upon from the scheme funds for unauthorised purposes."
Freedom SIPP partner John Quarrell recently said: "I do not know
if we will open again to new business. The regulator took all our
files and returned them but this mess is still ongoing."
However it now seems that HMRC has issued a petition for the
winding-up of The Freedom SIPP Limited which is to be heard at the
High Court on 23 September. HMRC expects Freedom SIPP trustees to
find a replacement scheme administrator but it is not clear whether
this can be done in time to aid its members
If the petition is successful it is likely HMRC will move to
deregister the scheme. This could expose members to a 40 per cent
deregistration fee and also lose the scheme its tax exempt
status.
