Hartley Pensions Enforcement: What Every IFA Should Learn From This Case
The FCA announced last week that it's moving toward formal enforcement action against Hartley Pensions Limited and an individual connected to the firm. For IFAs who've recommended SIPP transfers or worked with third-party pension operators, this case deserves your attention.
Not because you're likely to face the same charges. But because the regulatory expectations it highlights apply directly to how you conduct due diligence on the firms you recommend.
What Happened at Hartley Pensions
Hartley Pensions operated as a SIPP provider, accepting pension transfers and administering self-invested personal pensions. The FCA's concerns centre on the firm's acceptance of high-risk, non-standard investments into these pension schemes.
The regulator has been investigating Hartley since placing restrictions on the firm in 2021. Those restrictions prevented Hartley from taking on new business or conducting certain pension transfers without FCA approval. The firm entered administration in 2022, leaving thousands of pension holders in limbo.
Now the FCA has issued Warning Notices to both the company and an individual, signalling its intent to take formal enforcement action. While the specific allegations remain confidential until any final decision, the pattern matches the FCA's broader concerns about SIPP operators accepting unsuitable investments.
Why This Matters for IFAs
You might think this is purely a SIPP operator problem. After all, Hartley was the regulated firm accepting these investments. But the FCA's expectations on adviser due diligence have sharpened considerably.
When you recommend a client transfer their pension to a SIPP, you're not just advising on the transfer itself. You're implicitly endorsing the receiving scheme as suitable for that client's needs. If that SIPP operator later accepts investments that harm your client, questions will arise about your initial recommendation.
The FCA's 2020 guidance on SIPP operator due diligence made clear that operators should assess whether investments are suitable for pension schemes. But it also reinforced that advisers recommending SIPP transfers should understand the operator's investment acceptance policies.
Practical Due Diligence Steps
Before recommending any SIPP provider, document your assessment of:
Investment acceptance criteria. What types of investments will the operator accept? Do they have clear policies on non-standard assets? A SIPP that accepts almost anything should raise questions about their risk controls.
Financial strength. Check the operator's accounts. Hartley's financial position deteriorated before its restrictions. Operators with thin capital buffers may be more likely to accept higher-risk investments to generate fee income.
Regulatory history. Search the FCA Register for any past enforcement actions, requirements, or restrictions. Hartley's 2021 restrictions were publicly visible. Advisers recommending transfers to the firm after that date would face difficult questions.
Complaints data. The Financial Ombudsman Service publishes complaints data by firm. A spike in complaints about a SIPP operator often precedes regulatory action.
The Individual Accountability Angle
The FCA's action against an individual at Hartley reflects its increased focus on personal accountability. Under the Senior Managers and Certification Regime, individuals holding senior management functions can face enforcement action for failures within their areas of responsibility.
For IFA firm principals and compliance officers, this reinforces the importance of clear accountability for due diligence processes. If your firm recommends SIPP providers, who owns the process of vetting those providers? Is that documented? When was your approved provider list last reviewed?
The FCA expects firms to have robust governance around third-party recommendations. A list of approved SIPP providers that hasn't been reviewed in three years won't satisfy a supervisor asking questions after a provider fails.
Documentation That Protects You
When recommending a pension transfer to a specific SIPP, your file should show:
- Why this SIPP provider is suitable for this client's needs
- What due diligence your firm conducted on the provider
- When that due diligence was last updated
- Any limitations or concerns noted about the provider
Generic suitability statements won't suffice. If your client later suffers losses because the SIPP accepted unsuitable investments, you'll need evidence that your recommendation was based on reasonable assessment of the operator's controls.
Looking Ahead
The Hartley case will likely take months to reach a final outcome. Warning Notices can be contested, and the Regulatory Decisions Committee must make final determinations. But the direction of travel is clear: the FCA will pursue both firms and individuals when pension scheme operators fail.
For IFAs, the lesson isn't to avoid SIPP recommendations entirely. Many clients genuinely benefit from the flexibility SIPPs offer. The lesson is that your due diligence on receiving schemes needs to be as thorough as your analysis of the transfer itself.
PostGuard automatically checks your social media posts against FCA financial promotion rules before you publish. Catch problems before the FCA does — start with 3 free checks at postguard.online