DAC Pensions, which specialised in self-invested personal pensions (Sipps), has entered into creditors’ voluntary liquidation.
Regulator, the Financial Conduct Authority (FCA), also ordered DAC Pensions to inform its customers in writing that it had accepted business from unauthorised introducers that were not properly vetted. A statement from the FCA said that DAC Pensions had failed to carry out adequate due diligence on two EEA introducer firms before accepting business from them.
DAC Pensions has been told it must tell its clients that it will not be able to deal with any complaints as it will be in liquidation and any claims should now be passed on to the Financial Services Compensation Scheme(FSCS).
DAC Pensions was a Sipp operator based in Abbotsley, Cambridgeshire. The firm, which has been authorised since September 2017, offered the Davies & Co Sipp. It had some 697 clients and administered assets of £26.7 million.
What Went Wrong With DAC Pensions?
The FCA said that between December 2017 and July 2019, DAC Pensions accepted around 620 new clients from two introducers based in Ireland and Cyprus. But, the introducers did not have the required permissions to supply pensions advice in the UK.
The introducers advised clients to transfer their pensions into the DAC sipp and the funds were then invested in what were described as ‘high-risk assets’. DAC Pensions was administering assets of £20.4 million for these clients.
The FCA said the investments used were unregulated collective investment schemes that were based overseas and these were largely unsuitable for retail clients. What is more, customers had been unable to redeem the investments in some cases and they had not been told of this by DAC Pensions.
The regulator added that customers would be contacted by the Financial Ombudsman Service, which then would refer customers to the FSCS.
DAC Pensions is covered by the FSCS, which can pay compensation of up to £85,000 per claim, subject to the qualifying conditions for compensation being met.