SIPP administrators are being quizzed by the watchdogs and rule-makers at the Financial Conduct Authority (FCA) over the plans they have in place should they become insolvent, and over their general resilience.
The Regulator wrote out to SIPP providers following a ‘Dear CEO‘ letter the previous week, to ask them questions about their professional indemnity insurance policies, and for general information about their businesses that could help the FCA assess whether the companies are able to stay afloat.
SIPP providers and their roles and responsibilities have come under much more scrutiny in recent weeks after one provider, Berkeley Burke, lost it’s Judicial Review against a Financial Ombudsman Decision from 2014. The decision said that Berkeley Burke had failed in it’s due diligence by allowing an investment in a high-risk scheme (Sustainable AgroEnergy) through one of its SIPP accounts. The investment later turned out to be fraudulent.
Claims against SIPP Providers
Claims against SIPP providers have been requested by many apparent victims of pension mis-selling in the past. Often, these incidences involve a situation where money was placed into a SIPP, and investments with an unsuitably high risk level were chosen for the individual, but there is no financial adviser as part of the process to be help accountable.
In other cases, people have been compensated for bad advice from a financial adviser, but due to the FSCS cap of £50,000 per claim against an adviser, many are still out of pocket, and believe their SIPP provider should be forced to pay compensation too.
With the Judicial Review meaning that Berkeley Burke are still being held accountable, it may mean that other potential claims will now be looked at on a case by case basis.