Mis-sold Self-Invested Personal Pension Compensation Claims

A self-invested personal pension (or a SIPP, as they are widely known) is a ‘do-it-yourself’ pension option, which allows you to draw together more varied investments than most standard pensions. For some people, SIPP pensions are helpful, as they allow increased flexibility in terms of the quantity and types of investments you can enter into.

However, in some cases, financial advisers have encouraged investors to transfer money into high-risk investments via SIPPs without proper explanations of the potential risks, sometimes resulting in significant financial loss.

SIPP investment funds are usually selected by the financial adviser, who has a duty to choose investments that are aligned with the customer’s needs and objectives, as well as their attitude towards risk. Despite this, some financial advisers have been placing customers’ funds into risky investments without the customer being properly informed of the dangers involved. As a result, some customers are facing depleted pension funds and potential financial difficulties during their retirement years.

You may have a claim for compensation if:

• Your financial adviser encouraged you to change your investments without properly explaining the reasons why;
• Your SIPP pension has fallen in value despite assurances from your financial adviser that it would increase;
• Your financial adviser failed to properly inform you of factors that could reduce the value of your investment.

The Financial Conduct Authority (FCA) has reported ‘serious and ongoing failings’ by a number of financial advisers with regards to SIPP investments. The main failings generally revolve around advisers not ensuring SIPP investments are safe and suitable for investors’ needs.

One of the advisers which has faced disciplinary action from the FCA is Tailormade Independent. Tailormade was involved with encouraging customers to transfer existing pensions into a variety of unregulated investments via SIPPs, including investments in:

• Biofuels
• Green oil
• Farmland
• Overseas property, including investments with property firm Harlequin, which has since been liquidated.

Tailormade Independent itself has now gone into liquidation, with three of its directors now being banned from holding any further senior roles within the financial industry.

According to the FCA, the directors of Tailormade failed to ensure that the SIPP pension products they recommended were suitable for customers’ needs, as well as failing to uphold transparency around activities that posed a conflict of interest. For more information about Tailormade’s mismanagement of SIPP investments, visit our recent blog post.

When a self-invested personal pension (SIPP) has been mis-sold or the advice around it was negligent, there are established routes to claim compensation in the UK. 

Here’s how it works:

Redress routes:

• If your adviser gave unsuitable advice, you may go through the Financial Services Compensation Scheme (FSCS). For SIPP-related advice or failures by a SIPP operator, the FSCS may compensate up to £85,000 per eligible person, per firm in cases declared from 1 April 2019. 
• If the firm is still trading and you have a complaint about the advice or transfer, you may submit it to the Financial Ombudsman Service (FOS). Note: the FOS route may allow higher amounts of compensation, depending on loss of benefits and negligence; TLW would guide you through which route applies.

What you might recover:

• Loss of pension funds or return on investments that were unsuitable.
  Loss of benefits if you transferred out of a defined benefit (final salary) pension without proper advice.
• Interest and compensation to put you back into the position you would have been in but for the negligent advice.

Typical compensation amounts & timing:

• For example, the FSCS states that in the 2021/22 financial year nearly 1,400 pension-advice claims were above the £85,000 limit, resulting in over £450 million of uncompensated loss. 
• The FSCS’s own page explains that for SIPP-operator failures or bad pension advice: “up to £85,000 per eligible person, per firm” applies.
• Timeframes vary: simpler claims where the firm accepts liability may resolve within months; more complex claims involving litigation or unregulated introductions can take 12 months or more.

TLW’s role:
As your specialist solicitors, TLW will review your case, identify who is responsible (adviser, SIPP operator, introducer), determine the correct redress route (FSCS, FOS or court), and manage the claim on a no-win, no-fee basis. The earlier you act, the better your chances, strict time limits apply. Get in touch today.

Adams v Options UK Personal Pensions LLP (formerly Carey Pensions / Options)

In this case, the claimant transferred his pension into a SIPP administered by the firm formerly known as Carey Pensions (now Options UK) after being introduced by an un-regulated introducer. The investments (storage pods) failed. The Court of Appeal found that the SIPP provider could be held liable because the un-regulated introducer had carried out regulated activity (advising on investments) and the SIPP contract could be voided under section 27 of the Financial Services and Markets Act 2000 (FSMA). The Supreme Court later refused permission to appeal, confirming the significance of the precedent. 

Key take-aways:

• A SIPP provider may be liable if it accepts business where an introducer has given regulated advice without authorisation.
• The case clarified that transferring into a SIPP and investing in an unsuitable scheme can give rise to a claim even where the adviser is unregulated.
• It raises the importance of checking the chain of advice/introducer when evaluating whether your SIPP was mis-sold.

Regulatory enforcement by the Financial Conduct Authority (FCA)

The FCA has reported “serious and ongoing failings” in SIPP advice practices. For example, the adviser firm Tailormade Independent was disciplined for encouraging transfers into un-regulated investments (biofuels, green oil, overseas property) via SIPPs, and three of its directors were banned.

This demonstrates that mis-selling is not just theoretical: firms have been sanctioned for failing to assess suitability, failing to explain risks, and failing to act in clients’ best interests.

What this means for you:
If your SIPP was arranged via a transfer recommendation or you were invested into high-risk/un-regulated assets without proper advice, these precedents strengthen your case.

TLW will review whether your adviser or SIPP operator followed the required regulatory standards, and whether you may claim under FSMA, via FOS, or other routes.

We would particularly urge you to get in touch if your SIPP investments covered products such as:

• Off-plan properties
• Store Pods
• Wine
• Global Forestry Investments
• Australian farmland

Our experienced team may be able to help you to recover your losses even if your financial adviser or the firms you invested in are no longer trading.