Carey Pensions, meanwhile, is facing a number of Financial Ombudsman Service (Fos) claims, according to a BBC investigation. The firm has already announced it is to split its “distressed” assets into a separate book of Sipp business, in what it described as an “efficiency decision”.

Both firms declined to fill in this year’s Sipp survey. The Berkeley Burke case, in particular, is tipped to be a barometer for the likelihood of further action against providers.

Richard Prior, head of self-invested pensions at JLT Premier Pensions, says: “Sipp providers with high numbers of failed, non-standard investments are now anxiously awaiting the outcome of the Berkeley Burke judicial review case and a separate case against Carey Pensions. If the decisions go against these providers, there is a suggestion there could be as many as 6,000 cases waiting in the wings, with potential compensation likely to total tens of millions, and numbers likely to increase significantly. 

“The feedback we have received from advisers is that they are increasingly concerned about the level of exposure Sipp providers may have to failed non-standard investments, and whether they are financially strong enough to cope with a potential spike in compensation claims. There are also question marks about whether providers will have the support of their PI insurers if they are hit with significant compensation claims.”

This is just one piece of evidence that the regulatory backdrop may be about to become tougher for Sipp operators. Earlier this year the Financial Services Compensation Scheme (FSCS), declaring Brooklands Trustees, Stadia Trustees and Montpellier Pensions Administration Services to be in default, said it would start accepting claims against Sipp providers in relation to due diligence practices.

“The recent FSCS decision, coupled with similar claims being put before the court, suggests the Sipp industry appears to be reaching a watershed moment,” says Lee Halpin of @Sipp.

At the heart of the issue is the age-old debate about whether an adviser or a Sipp operator is liable in the event that investments go awry. Fos claims against Sipp providers have been put on hold for several years, pending clarity over a Berkeley Burke challenge to a 2014 ruling against it. But rulings against providers in the legal cases mentioned above could oblige the Fos to fall in line. If that is the case, advisers should not breathe a sigh of relief. Rather they should redouble their own due diligence practices, and the questions they ask of operators, to avoid being caught out down the line. 

A robust assessment of risk – relating to both current and legacy investments – will be crucial to ensuring the Sipp success story can continue.