FCA to transform SIPP regulations

The Financial Conduct Authority (FCA) has already attempted to avert any mis-sold SIPPs by requesting that SIPP companies assess which of their advisers are selling the pension inappropriately. Now the FCA is planning to put more responsibility on the companies themselves. Any providers unable to pass the FCA’s tests may be forced to close down.

The move is perceived by many to be an important shift in attributing responsibility within SIPP regulations. At present, SIPP providers hold little accountability for recommending an investment which turns out to be non-beneficial for a client, often shifting liability towards the investment firm itself.

SIPP Investment Rules

The proposed changes to SIPP regulations due in September would appear to be very welcome. In cases where an investment has been suitable for the individual, the issue of responsibility between the investor, SIPP provider and those recommending the investment has often been something of a grey area. The FCA’s proposed new SIPP regulations should make the issue of responsibility much clearer, in cases of investments being mis-sold.

The changes to SIPP investment rules are the latest in a series of issues relating to the pension industry. Providers of SIPPs are already faced with a rise in charges, combined with a drop in bank rates. The Financial Services Compensation Scheme (FSCS), is also set to levy over £350 million from registered and regulated independent financial advisor firms to pay for the compensation claims against mis-sold SIPPs that it expects will follow in 2016.

SIPP Pension Investments

We have seen a number of cases involving mis-sold SIPP pension investments in recent times, with people investing into a variety of high-risk ventures using SIPPs. These range from overseas property or land, to wine, green oil and store pods. One high-level case in recent times involved Harlequin Properties, a company now in liquidation, which was set to build luxury Caribbean properties from UK investors’ money. Much of this money was secured through SIPP pension investments. A similar case can be found with Elysian Fuels, a renewable energy project that saw close to £200 million invested through SIPPs.

As with any outlay, we would recommend using caution before investing your money. However tempting an offer may sound, many SIPP pension investments carry a risk and can be unsuitable for unsophisticated investors.

If you believe you may have received inadequate advice on your investment which involved a SIPP and have subsequently lost out financially, TLW Solicitors are here to help on a no-win no-fee basis.

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