SIPPS now targeted as happy hunting ground for mis selling by FAs

Published:  22 May at 6 PM
Want to get involved? Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
The Financial Ombudsman has said that cases involving the mis-selling of personal pension schemes including high-risk, unregulated funds increased by 49 per cent during 2012.

Some 75 per cent of complaints received by the Ombudsman were proven to have involved FAs giving dangerous advice on investing in funds such as overseas property developments, film schemes and forests. SIPPS investment in unregulated high-risk funds provides no protection of capital should the fund collapse, as many have.

In just under two thirds of the cases it investigated, the regulator found that either the financial advisor or the SIPP provider was at fault. In most cases, the investor lost most of all of the invested pension pot.

According to the ombudsman, higher returns may look and sound enticing, and the SIPPS scheme, intended to give individuals more control over their retirement savings, can be the best way forward for many. However, as well as pushing high-risk options, FAs are selling SIPPS which are, in themselves, unsuitable for the client.

A major complaint was the mis-selling of SIPPS aimed at experienced investors to complete novices in the field by FAs more interested in their commission than in trustworthy customer service. Once the permitted SIPPS investment lists were removed, a surge was seen in the number of SIPPS offering esoteric, unregistered funds.

The SIPPS industry has urged for some time that the permitted lists be reinstated, with its spokesperson stating that to do so would greatly reduce the risk of poor advice being taken seriously, resulting in major losses to investors. Expats are at particular risk, as many invest after advice from unqualified, unethical FAs or via the many internet financial advice sites which quote, for example, alternative hedge funds as low-risk and high return.
Like this news?

Comments » No published comments just yet for this article...

Feel free to have your say on this item. Go on... be the first!

Tell us Your Thoughts On This Piece:

Your Name *
Email * (not published, needs verification one time only)
  • Facebook
  • Follow us on Twitter
  • RSS feed
  • Facebook

Latest Headlines

News Links

News Archive