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Pension Providers

Pension Providers and SIPP Mis-selling

Pension providers are organisations responsible for the arrangements and services of pension schemes, such as SIPPs.

They have many duties. From delivering annual statements and releasing your pension income. To making sure they operate and administrate your pension arrangement in line with industry regulation.

Pension Providers have played a part in SIPP mis-selling, but it’s only in recent years that claims against them have been accepted.

There have been recent high court cases involving pension providers Berkeley Burke and Carey Pensions in which clients have successfully proven a lack of “due diligence”

Due diligence could apply to the investments within the SIPP, as well as how the Pension Provider accepted your business.

Since 2018 several SIPP operators have been declared in default by the FSCS as the result of claims brought against them.

Claims for mis-sold Sipps are regularly paid out against Sipp Providers

It is a fact of law that Pension Providers carry a certain amount of responsibility for failed Sipps, just as Financial Adviser firms do.

All responsibility revolves around Due Diligence and these two main points:

  1. Was the Saver engaged through an unregulated Pension Introducer?
  2. Did the SIPP Provider check the legitimacy of the investments within the Sipp?

Unregulated Pension Introducers

Unregulated Pension Introducers are a common factor in mis-sold SIPP pension cases.

Using clever marketing tactics such as cold calling people and offering a free pension review.

The purpose of these pension reviews is to persuade people to move their pensions into certain investments. For which the Introducer is paid a commission.

Often these investments are high-risk, unregulated and in some cases even scams.

Examples of some high-risk, unregulated investments that were held in mis-sold SIPPs include:

Many SIPP providers have accepted business from unauthorised pension introducers, on the basis they wouldn’t be liable for any investment advice. And that the SIPP was a way for the client to choose investments on their own or with the aid of an IFA.

However, successful claims are now being made against SIPP providers. And it is clear that the FCA rules mean as a regulated entity they are responsible for applying adequate due diligence. Not just to the investments in their SIPPs but to any 3rd parties they accept business from.

A landmark case reached the High Court, the Court of Appeal and still rumbles onto this day. All the legal ramblings are an attempt to establish the exact boundaries of what the SIPP Provider is responsible for. That Case is Carey Pensions v Adams.

In essence, we are at the stage where it is agreed that Sipp Providers who accept introductions from unregulated Introducers must shoulder any risks if the investment goes wrong.

This is because the Provider is duty bound to carry out due diligence on the root of how the Pension Saver came to invest. If they were engaged through an unregulated Introducer ‘that’s on them’ so to speak.

Well to put it how Lady Justice Andrews did in her judgment: “If they [The Provider] accept business from the likes of CLP (an unregulated Introducer), they run the risk of being exposed to liability…”

Due Diligence

Failure to carry out due diligence on the nature of the investments is also a failing of the SIPP Provider.

A classic example can be seen with SIPP Provider, Liberty Sipp.

Their client, Wayne Charlton, lost £29,000 via Sustainable Agro Energy – an investment inside his Sipp. It was a project which sold plots of land in Cambodia where trees would be planted to created bio-fuel. It all sounded great but it was a huge scam. Hence Mr Charlton bringing a successful claim against his Provider – the floodgates then opened for many more such claims. To date, Berkley Burke has received around 1,700 customer complaints. The 58 which have so far been settled have seen payments totalling £2m from the Financial Services Compensation Scheme.

Making a claim against a SIPP Provider

In view of the above, there are two clear grounds for making a claim against a Sipp Provider.

It is important to take action as soon as you suspect something is wrong with your pension. This is because there could be time limits that apply to making your claim for SIPP mis-selling.

If you have any questions get in touch! The Pension Claim Consulting team will be happy to discuss how such claims can be made, while helping you establish the facts around the history of your Sipp Investments and your SIPP Provider.

To find out more arrange a free initial consultation. Or call our office and have a chat with one of our trained assessors.

Important Information!

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.