Elaine Turtle: People forget that Sipps are SELF invested

As we all know the FCA issued a consultation on the Financial Services Compensation Scheme (FSCS) funding under CP16/42 and this is under review. The last time these rules were reviewed was in March 2013. FSCS levies have risen considerably since then and each party has their own views on who should be held responsible – the provider, adviser or investment company.We have all seen cases where an unregulated investment was held in a SIPP, the investment has gone into liquidation and the member wants compensation. Most cases like this have gone to the Pensions Ombudsman (PSO) and they have generally ruled that if advice was given or the member made the decision themselves then the provider has not been held responsible. Cases that have gone to the Financial Ombudsman (FOS) have been ruled differently and we still await the case with Berkeley Burke.At lot of press headlines show ‘SIPP claims increase FSCS levies’ but usually the details show it is not the provider, but either where the investment which has gone bust and unregulated sales people sold this to the member or there was an adviser involved.Since 2013 providers have known that the FCA requires them to complete more due diligence on investments so most providers have reviewed their acceptance position on what they will allow and there is an expectation that the new Capital Adequacy requirements will see more providers not allow non-standard investments and in time fewer claims against the compensation scheme.So should providers be held accountable for investments that have gone wrong and therefore have to pay a higher premium into the FSCS compensation scheme? What about the firms that introduce and sell the investments, should these firms not be held responsible and made to pay more into the compensation scheme?Most people seem to forget that a SIPP is self invested. SIPP providers rarely recommend an investment – even a platform SIPP provider – they are providing a platform for the client or adviser to choose the investments and are not recommending investments to the client.What SIPP providers do is carry out investment instructions that the client or the adviser have requested. Suitability and risk profiling should already have been carried out before the provider is involved.I am sure other providers, like ourselves, who have restricted what they allow within their SIPP, now spend more time explaining to frustrated clients that they cannot invest in a particular high risk or non-standard investment. It still astounds me today the unbelievable investments that are forwarded to us by clients that you can see will be a recipe for disaster.As providers are spending a lot of their time stopping these investments being placed in SIPPs it seems harsh to pay more when the responsibility lays elsewhere.Elaine Turtle, Director, DP Pensions

Elaine Turtle: People forget that Sipps are SELF invested

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