As you may be aware Hartley entered into administration on 29 July 2022. This decision was made as a result of serious operational and regulatory issues which caused the Financial Conduct Authority (''FCA'') to impose a number of voluntary requirements on Hartley. Upon seeking professional advice, the director of Hartley concluded that Hartley was or was likely to become cash flow insolvent in the future and therefore opted to place Hartley into administration. The administration of Hartley is conducted by Peter Kubik and Brian Johnson of UHY Hacker Young LLP (the "Administrators").

Administration is an insolvency process whereby Hartley has been placed under the control of insolvency practitioners who will manage the affairs of Hartley, instead of the director. The Administrators have a statutory objective of achieving a better result for the creditors as a whole than would be likely to be achieved if Hartley were wound up (without first entering administration). As such the Administrators have been operating Hartley since 29 July 2022 (when it first entered administration) in order to transfer out all SIPP clients to a new provider.

The alternative route to Hartley being in administration and the Administrators transferring all SIPP clients to new operators would be to place Hartley into liquidation. This would have a detrimental impact for all SIPP clients as they could be faced with a de-registration tax charge. This de-registration tax charge is 40% of the cash held in the SIPP plus the market value of any other assets held within the SIPP immediately before it is de-registered.

The Administrators are incurring costs in continuing to administer the SIPPs and Hartley cannot continue to trade in administration without further funding. This is because prior to Hartley entering administration, its source of revenue was a combination of the charges placed upon clients for the establishment of their SIPP within Hartley and the continued administration of their SIPP thereafter. However, as the Administrators team are made up of professionals with attendant market charge-out rates which are higher than the salaried costs of the employees at Hartley, the annual administration charges are insufficient to cover the costs of continuing to administer the SIPPs, identify and agree terms for new operator(s) and subsequently transfer the SIPPs to the new operators. As a result, the Administrators intend to replace the current annual administration fees with a single 'exit and administration charge' (''EAC''). Whilst the SIPP client's terms and conditions grant the Administrators the authority to impose the EAC, the Administrators have filed a court application seeking confirmation that the Administrators can validly apply the charge, whether under clients existing terms and conditions, or under amended terms and conditions. Therefore until such time that the court application process has finished and the EAC has been imposed, the Administrators are unable to process any transfers out of clients to new operators.

Yes, all clients will have the opportunity to identify which new provider they wish to transfer to.

The Administrators have now issued the court application with a hearing date of 29 February and 1 March 2024. Therefore the Administrators expect to commence the transfer out process in March 2024. It is expected that a transfer out of all clients to new appropriately regulated operators will take 12 months and therefore clients can expect the latest that they will be transferred out to a new operator is February 2025.