Intelligent Money, a Sipp provider facing financial difficulties due to upheld complaints regarding its investments, has declared insolvency. The £1 billion firm was forced into administration last week. 

The company was struggling to meet the potential payouts associated with complaints filed with the Financial Ombudsman Service (FOS). These complaints related to investments Intelligent Money allowed within their Sipp plans, which may have been unsuitable or risky for clients.

To avoid complete collapse, Intelligent Money entered a pre-pack administration deal with Quai Administration Services, a competitor with a stronger financial standing. This prearranged deal ensured a quicker and smoother transition for Intelligent Money’s clients.

Here’s what the deal entails for Intelligent Money’s clients:

Continuity of Service: Clients retain access to their Sipp accounts, ISAs, and general investment accounts. They can continue to make contributions, withdrawals, and investment decisions through Quai’s platform.

Minimal Disruption: Quai acquired Intelligent Money’s technology and staff. This ensures familiarity for clients and minimizes disruption as they transition to a new administrator.

Uncertain Liabilities: The financial terms of the deal haven’t been disclosed. It’s unclear whether Quai takes on any potential liabilities associated with the FOS complaints against Intelligent Money.

The Financial Services Compensation Scheme (FSCS) is now investigating the situation to determine if clients qualify for additional compensation due to the upheld FOS complaints. This investigation could result in further payouts to clients on top of what Intelligent Money was expected to pay.

Quai, founded in 2011, provides an outsourced administration platform.  While acquiring Intelligent Money’s £1 billion in client assets boosts their total to £2 billion, Quai’s past financials raise some concerns.

Their most recent filings show a pre-tax loss of £1.1 million for the year ending October 2022.  Additionally, their auditor raised doubts about Quai’s ability to meet its financial obligations due to “material uncertainties.” However, Quai recently stated they are now profitable and have no cash flow problems.

In contrast, Intelligent Money was known for its low fees, charging only £195 annually for their Sipp product. However, they faced financial difficulties, requiring a one-time fee from customers in December 2023, which they later reversed due to negative feedback. Additionally, the full impact of the FOS complaints and potential FSCS involvement remains unclear.