FCA warns about abuse of Sipps by 'free pension review' firms

The FCA has warned that some firms offering consumers 'free pension reviews' are using Sipps and SSAS to transfer people into high risk unregulated investments. There is also evidence, says the FCA, that some unscrupulous firms are using the Budget announcement about free pensions guidance to claim they are already offering a government-backed free advice service. Once consumers have undertaken the 'free review' some firms are then using Sipp or SSAS schemes to transfer their pensions into unregulated investments.Tracey McDermott, FCA director of enforcement and financial crime, says that consumers should be "very wary" if they are offered a free review unexpectedly. She says that many of the firmsoffering these services are not authorised by the regulator and there is evidence that some reviews end in consumers having their pensions moved into unregulated investments.The 'free pension review' offers can come out of the blue in the form of an unexpected phone call, an email, text message or an online advert, said the FCA.{desktop}{/desktop}{mobile}{/mobile}Ms McDermott added: "Most of the companies making these offers are not authorised by us, though they often falsely claim they are acting on our behalf. Some claim they are acting on behalf of the Government in relation to the recently announced commitment to introduce a service to provide free guidance for people at retirement. This initiative has not been launched yet and therefore claims to be linked to it are highly unlikely to be true."The FCA says that these so-called free "reviews" are designed to persuade consumers to move money saved in an existing personal or occupational pension to a self-invested personal pension (Sipp) or a small self-administered scheme (SSAS). The pension pot is then typically invested in unregulated investments like overseas property developments, forestry or storage units known as store pods.The FCA also warns that people who take up the offers may have only 'limited protection' if something goes wrong with the investment when it comes to the right to complain or seek compensation.It urged consumers to check firms offering advice were on its register.

FCA warns about abuse of Sipps by 'free pension review' firms

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