Further SIPP changes may be coming with the issue of interest skimming gaining prominence in recent weeks, following a survey of financial advisors themselves.
Interest skimming has been part of some SIPP processes for a while, but given the unwanted attention some parts of the industry has received over mis-sold SIPP pension investments in the past few years, the results of a recent survey may lead to a more transparent SIPP process than ever before.
What is interest skimming?
Interest skimming involves SIPP investment advisors claiming some of the interest from clients’ bank accounts, without them declaring this as an outright charge to the client. Traditionally this was seen as a way for the SIPP investment advisor to make a profit, but with increasing fees being charged, interest skimming may now appear far less justifiable.
In a recent survey over 100 financial advisors were interviewed, all of whom had worked with SIPP investments and/or other pension products. Nearly a quarter felt that interest skimming should be removed outright, and two-thirds felt that interest skimming should be declared to clients. Such a declaration would give the industry greater visibility and allow clients to make a more informed decision based on costs when shopping around for a SIPP.
Future SIPP Changes
Our blog in February concerned potential future SIPP changes in order to cover compensation claims against mis-sold SIPPs. Along with rising charges and lowered interest rates, SIPP regulations are likely to continue to involve well into the future.
Although the impact of such a change may hit the smaller SIPP investment firms the hardest, it remains to be seen whether the declaration of interest skimming as an additional charge for customers will affect the industry as a whole. From a purely client based perspective, any transparency regarding fees in what can often appear to be a complex financial investment is surely to be welcomed.
As with any investment, we would recommend using caution before moving your money around. Whilst SIPP investments have benefitted many, they are not suitable for all investors and may not be of benefit to you in the long run.
If you believe you may have received inadequate advice on your SIPP investment and have subsequently lost out financially, TLW’s financial mis-selling solicitors are here to help on a no-win no-fee basis.
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