What Is the SIPP Mis-Selling Scandal?
The SIPP mis-selling scandal involves financial advisors convincing pension holders and savers to invest their money in a SIPP – a Self-Invested Personal Pension. The pitch financial advisors make when selling SIPPs is often to promise high returns on investment.
Many of the SIPP investments that people bought were highly risky. They can also be unregulated investments, so are not covered by the Government’s compensation scheme. In many cases, the people buying these products did not fully understand the nature of the investment.
This is important as high-risk and unregulated investments are only suitable for experienced investors and high net worth individuals.
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Sophisticated Investors
Normal pension holders in the UK are not sophisticated investors, so don’t meet the above criteria. Despite this, SIPP investments that people put their hard-earned money into include farms in South America, airport car parking schemes, green energy projects, and more.
Why is this a problem? The Financial Conduct Authority regulates financial advisors in the UK, making sure they operate to a certain standard. One of those standards is ensuring an investment is suitable for a client. This involves getting an understanding of the client’s knowledge of investing and his or her investment experience. The financial advisor must also learn about the client’s investment objectives and their attitude to risk.
High-risk and unregulated investments, should not, therefore, be sold to people with minimal investment knowledge or experience. Despite these rules, unregulated investments appear to have been sold on a large scale in the form of SIPPs.
What Is the Scale of the Scandal Then?
The SIPP scandal is being called one of the biggest mis-selling scandals ever, with the total value of claims potentially reaching £10 billion. If that were to happen, the SIPP mis-selling scandal would be the biggest scandal since PPI. It could also involve hundreds of thousands of people who were mis-sold a pension.
We don’t know the exact scale of the problem, however, because the industry and regulators are only starting to understand exactly what has been going on in the SIPP investment market. Part of the issue is there are large numbers of people who don’t yet know they may have been mis-sold a SIPP investment.
There is also a lot of variation among SIPP providers too, about whether they include non-standard assets in the SIPP products they sell.
However, research by the FCA shows that as many as one in eight people who bought a SIPP believe they may have been mis-sold.
If you have invested your pension into a SIPP (self invested personal pension) at one point in the last few years and have heard stories about mis-selling, you may be worried that you were mis-sold the investment. Or you’ve seen the value of your pension fund drop to zero because SIPP investments hasn’t produced the expected or promised returns.
If you believe you may have been mis-sold, get a FREE No Obligation SIPP claim assessment with our claims specialists now and start the process to reclaim your loss.
Common Grounds For Compensation Claim
You may have an eligible claim for compensation if:
- You were encouraged by your financial adviser to change your investments without a proper explanation of the reasons why you should be doing this.
- You were assured that your SIPP pension value would increase by your financial adviser but has fallen.
- You were not properly informed of the factors which could result in a reduction of the value of investments
- You felt uncomfortable or pressured by your financial adviser into an investment that you didn’t need or want.
- The pension transfer & investment risks were not properly explained to you by your financial adviser.
- Your financial adviser did not properly assess your financial situation by carrying out a fact find exercise.
- At no time did your financial adviser make you aware that your funds were being invested in an unregulated investment.
- You feel that you were given poor advice by your financial adviser concerning SIPPs which has left you financially worse off.
- Information was not provided by your financial adviser about exceeding the £40,000 tax-free limit would make you liable for the 55% income tax.
