SIPP mis-selling has been so abundant in recent years that it has hit scandal proportions. It was even dubbed “the dawn of a new mis-selling scandal” by the Sunday Times.
A reported £695m has so far been paid out by the Financial Services Compensation Scheme for SIPP related claims.
And Billions of pounds have been lost as a result of the unregulated or high-risk investments in mis-sold SIPPs.
The SIPP mis-selling scandal refers to the incredible number of Self-Invested Personal Pensions that have been mis-sold to consumers.
People have been targeted by unregulated introducers cold calling and misleading them with biased pension reviews designed to sell unsuitably high-risk investment schemes – without having the regulated authority to do so.
SIPP mis-selling may also involve negligent pension transfer advice from financial Advisers or Pension Providers skirting on the edges of regulatory responsibility, accepting business and investments without applying proper due diligence.
SIPPs themselves are not the problem. They can be great investment products for the right kind of investor.
Unfortunately, thousands of people who are not suitable for SIPPs or the investments involved have been mis-sold.
Some believe the SIPP scandal is down to unscrupulous Financial Advisers, SIPP operators and Unregulated Introducers abusing the product. Using them as a way to get people to invest their pension in high risk, unregulated investments.
The majority of SIPP mis-selling cases begin with an Unregulated Pension Introducer and a Free Pension review.
The outcome of the pension review will be a biased recommendation to move your money into a particular investment.
Many may promise guaranteed high returns, better retirement outcomes and sometimes cash incentives.
The client will then be passed on to a regulated Adviser or SIPP provider to undertake the transfer or investment.
Introducers are fundamentally firms whose business is to “introduce” you to a product or company. For this they will usually receive a commission. They are not usually authorised to give pension or investment advice. This means they don’t have to act in your best interests or follow any rules or regulations.
There’s quite a lot of Unregulated Pension Introducers associated with mis-sold SIPP cases.
Here’s some of the most prolific…
Terence Wright ran several companies from Spain which targeted UK investors. These include Alhaurin Wealth Planning, PFR Services (Planning For Retirement), TPS Land, Cash In Your Pension and CL&P Brokers.
GAS Verdant, Los Pandos and Store First were some of the high-risk, unregulated investments his companies promoted.
Avacade Limited and Alexandra Associates directors were taken to court by the FCA and ordered to pay over £10m in restitution.
Their “unlawful pension advice” persuaded 2,000 investors to transfer over £91mn into SIPPs and alternative investments. Many of these investments have now failed or are in liquidation.
Caledonian International Associates (CI Associates) are known to have been actively involved in Armed Forces pension transfers.
Between 2012-2013 David Clark was responsible for introducing over 500 clients to SIPP provider Carey pensions UK.
Despite the fact that transferring out of the Armed Forces Pension Scheme would only be suitable for some members, in exceptional circumstances.
Some SIPP mis-selling may involve negligent pension transfer advice from a regulated Financial Adviser.
SIPPs are considered unsuitable pension products for people with little investment knowledge or experience. This is because of what’s involved with managing a SIPP, as well as the risks involved with the investments they contain.
Financial advisers must always act in their client’s best interests. Failure to do so breaches the strict rules as set out by the Financial Conduct Authority.
However, some Financial Advisers have recommended SIPPs or facilitated transfers into SIPPs which have not been in the best interest of some of their clients.
It’s only in recent years that claims against Pension Providers have been accepted.
Recent high court cases involving pension providers Carey Pensions and Berkeley Burke have seen clients successfully challenge a lack of “due diligence”
Due diligence could apply to the investments within the SIPP. It could also apply to how the Pension Provider accepted your business.
Several SIPP operators have been declared in default by the FSCS as the result of claims brought against them.
The investments involved with mis-sold SIPPs nearly always appear attractive, with “high returns and more control over your money”.
These include unusual schemes such as Overseas holiday developments, storage pods, green energy, diamonds and farmland.
They may seem exciting projects to be involved with. Especially when you are shown a glossy brochure with stunning pictures and pension forecasts.
A good example of this is Harlequin Property, a development in the Caribbean.
The scheme was to deliver 6,000 hotel and rental properties in the Caribbean and other locations. But only around 300 of the proposed properties were actually built.
Financial Advisers persuaded hundreds of UK Pension Savers to invest more than £400m into the scheme. But the capital disappeared into thin air, leaving the Pension Savers with collapsed pension pots.
When it comes to SIPP mis-selling it can be hard to establish who is to blame and where to begin making a claim if you have been mis-sold.
Unfortunately, you cannot claim against unregulated introducers.
However, if an FCA regulated company such as a pension provider or financial adviser was involved with your SIPP and you can prove they failed in their regulatory duty, you may still have a case.
You are not required to use our services to pursue your claim. You can also seek further advice or shop around subject to any time limits within which a claim must be made.
It is possible for you to present the claim for free, either to the firm or person against whom you wish to complain or to the statutory ombudsman (Financial Ombudsman Service or Pension Ombudsman Service) or the Financial Services Compensation Scheme, whichever is applicable to your claim.