The Financial Services Compensation Scheme (FSCS) expects claims against mis-sold SIPPs (self-invested personal pensions) in 2016 to continue in line with 2015 figures.
Although numbers will be confirmed at the start of the financial year in April, the FSCS looks set to levy around £363m from financial firms to pay for the expected SIPP claims. With the issue now better known by investors and regularly in the public domain, any firms authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority will share the cost of the expected bill.
The Chief Executive of the FSCS has made the following personal statement:
‘We cannot accurately predict the volume or nature of claims in any year. However, we expect that claims from retirement savers who have been badly advised to hold risky investments in the self-invested personal pensions (SIPPs) will continue at current levels.’
Bad advice, not bad SIPP
In spite of the headlines that SIPPs have earned in the past few years, it’s worth bearing in mind that the SIPP pension product itself is not actually at fault. The SIPP was initially aimed at the wealthy few and its sellers were the domain of banks and larger financial companies. A relaxing of SIPP rules and regulations allowed more organisations to get involved.
This increase in competition led to an increase in SIPP sales, followed by an upsurge in SIPPs sold to people for who they were unlikely to be suitable. Regulators over the past few years have been trying to keep up with a market that was intended to be of benefit to a small few sophisticated investors, and has ended up being a hindrance to many.
As reported earlier this month by www.ftadviser.com – the online resource for financial advisers – an individual recently invested in green oil via a SIPP investment, a move which failed to be of financial benefit. Following an investigation by the Financial Ombudsman Service, it was decided that the investor’s financial advisory service did not explain the investment correctly. The individual involved claimed that they would not have made the move had the financial adviser provided suitable advice and explained the risks involved in this type of investment, and is set to receive compensation as a result.
At TLW we have worked on countless similar cases, where large investments have been made by individuals who have relied on the expertise of those working within the industry to make an informed decision for them. Changes to SIPP rules have made this more widespread than ever before, but anyone who believes they have made a SIPP investment through incorrect advice may be able to claim compensation.
“The continued requirement for a levy on IFAs show that the FSCS foresee further misery for those caught out by pension and investment scams. SIPPs are often the vehicle through which the scammers chose to relieve unfortunate people of their cash. Wherever possible we try to advice people how to avoid falling victim to these sorts of scams. The message from the FSCS is that this problem isn’t going away any time soon. For anyone caught up in an investment or pension scam or thinks they have been given poor advice please contact us to discuss your potential options.”
Peter McKenna, Partner
TLW Solicitors offer advice on how to reclaim compensation for a mis-sold SIPP, and are here to help on a no-win no-fee basis.
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