This article reflects the opinions of its author and not necessarily those of ShareSoc.
Need for name on register further evidenced as high costs of administration seem likely
I have been to Cape Verde and seen some of The Resort Group “investments”, many of which are half built following a boom. So, I was not that surprised when I read this story.
The Financial Services Compensation Scheme has declared SIPP operator Rowanmoor Personal Pensions in default after receiving 1,464 claims against the firm. Rowanmoor collapsed in August 2022 under the weight of hundreds of complaints related to failed offshore investments in its SIPPs. These were then re-routed from the Financial Ombudsman Service to the FSCS, which has been investigating them since.
The company, which operates nearly 5,000 client pensions, manages assets of £1.4billion. Rowanmoor’s failure comes after it was revealed in 2021 that the company had received over 800 complaints against it through the Financial Ombudsman Service (FOS). Over 500 of these complaints were regarding investments made into the Cape Verde based property group, The Resort Group. As of 1st September 2022, the number of complaints had risen to over 1,000.
According to the FCA, one complaint upheld by the FOS was representative of most complaints against Rowanmoor. The regulator also said Rowanmoor had entered administration due to having “historical high-risk, non-standard assets” and that it failed to conduct adequate due diligence before accepting such assets into clients’ SIPPs.
Rowanmoor’s collapse into administration will see many clients lose significant sums of cash. While the FOS can award compensation of up to £375,000, all outstanding and future complaints will now be brought via the Financial Services Compensation Scheme (FSCS), which has a significantly lower compensation cap of £85,000.
Whilst it appears that the FSCS will award compensation for any losses caused by mis-selling on the part of Rowanmoor, it is not clear that the FSCS will cover any excess costs of the administrators and the transfer of SIPP accounts. This has parallels with the present Hartley Pensions case where the FSCS are refusing to pay the costs of the administration and transfer of pensions, leading to the likelihood of a £37m “haircut” for the SIPPs.
More background here:
- Lawplus – Rowanmoor collapses into administration
- FT adviser – Rowanmoor declared in default as it faces nearly 1,500 claims
Cliff Weight, ShareSoc member
DISCLOSURE: The author does not hold shares/a short position in RowanMoor or The Resort Group.