The Leicester-based self-invested personal pension (Sipp) and small self-administered scheme (SSAS) provider agreed a deal with the Financial Services Authority (FSA) to take on administration of the Freedom Sipp book.
Freedom Sipp was liquidated last year and its licence taken away by HM Revenue & Customs. This left its 180 remaining clients potentially facing a 40% tax bill because they were not administered by a regulated scheme.
“It would be a very significant level of taxation, which would not be in any party’s interest,” said Murray Smith, sales and marketing director at Mattioli Woods. “It was something that absolutely had to be dealt with.”
He added: “We felt our industry needed to look after itself. It was inappropriate from a moral perspective to see the members cut lose like that.”
Freedom Sipp had been warned by the FSA over poor administration and there were initial concerns over whether the book would be attractive to other providers to pick up.
But Smith said: “I don’t think the issues were anywhere near as big as were painted. There were key problems, but all very resolvable.”
Under the terms of the deal, which was negotiated with the Freedom Sipp’s liquidators PricewaterhouseCoopers, Mattioli Woods became the default scheme. If clients do nothing, they will join Mattioli Woods’ existing book, though they have the option to leave the scheme and transfer their funds to another provider.
Smith confirmed Mattioli Woods would continue to work within the book’s existing fee structure so while there would be no exit charge, the firm could charge for additional work if the clients transferred.
Mattioli Woods’ six-month interim results to November 30 last year showed the firm’s revenue had dropped 3.8% to £6.59m, while its number of scheme members had increased 2.7% to 2,584.
