FCA advises SIPP firms on possible closures following High Court case

The SIPP provider was challenging a FOS decision from 2014 which ordered it to compensate a client for failing to carry out due diligence on an investment.

Andrew Bailey, chief executive of the FCA, has now written to CEOs of SIPP firms, asking them to "consider the potential implications" of the judgement for their firms and customers.

Bailey said the FCA will be contacting SIPP operators to discuss their options, stating that "if a firm may not be able to meet its financial commitments, it may be in the interests of some of its customers for part or all of its business to be sold to another firm".

He added that if the outcome of such High Court cases causes firms to question their ability to meet financial commitments, they must notify the FCA immediately.

Where relevant, Bailey said firms should also notify claims to their professional indemnity insurers in accordance with their policies.

In his letter to CEOs, Bailey said: "We recognise that if a firm may not be able to meet its financial commitments, it may be in the interests of some of its customers for part or all of its business to be sold to another firm. If your firm does so, we remind you that our Principles for Businesses require your firm to pay due regard to its customers’ interests and treat them fairly.

"In particular, in pursuing any sale, your firm should pay due regard to its implications for customers who may have compensation claims. We expect all directors, as well as complying with the relevant provisions of the FCA Handbook, to comply with their statutory and non-statutory duties. These include, where a firm is at risk of insolvency, their duties to creditors, such as customers to whom compensation is or may be due."