People who have suffered from a mis-sold SIPP will be pleased to see that the Financial Services Compensation Scheme (FSCS) are considering holding SIPP Providers liable for the mis-sold SIPPS as well, not just the investor’s Financial Advisor.
Until a recent review, the responsibility for important pre-investment checks for client suitability has sat almost solely on the shoulders of the investor’s financial advisor, with SIPP Providers taking no responsibility for pension mis-selling, despite taking the client’s money.
But this review of FSCS practices seems to put SIPP Providers on the hook too, and reports in financial publications such as FTadvisor suggest that these changes may have occurred due to spectacular and high-profile cases such as the Harlequin Property scandal – still under investigation by the SFO (Serious Fraud Office) with support from Essex Police.
Harlequin has been a nightmare for huge numbers of UK investors, many of whom have been using Get Claims Advice to pursue their claim for compensation through the FSCS against their IFA, and now their SIPP Provider too!
Investors put about £400m collectively into the Harlequin scheme to build around 3000 properties in sweet-spot locations like the Caribbean, but years later only a handful have actually been built, cause ROI rage amongst investors and prompting the SFO investigation.
SIPP Providers on the hook at last?
For many investors who have potentially been left out in the cold from incidents like Harlequin Properties, having SIPP Providers on the hook will be great news, especially for those who cannot claim their full investment from their IFA due to them no longer trading, and with the FSCS capping their compensation at £50,000.
In a FTAdvisor report on the subject, Ben Sear of Martin Redman Partners was quoted in support of placing more responsibility in the hands of providers – “[…] everyone wants to blame the advisor […] but providers are a check and balance. There are far more people on this gravy train.”