Luke Baldwin
Solicitor
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Date Published:08 Mar 2016 Last Updated:23 Jul 2021

Mis-sold Pension and Self Invested Personal Pension (SIPP) claims on the rise…

Banking & Finance Litigation

In 2014, The Financial Conduct Authority (FCA) reviewed Self Invested Personal Pension (SIPP) operators and found that some firms were still failing their regulatory obligations, despite previous warnings.

FCA’s Findings

Many firms were found not to have the necessary expertise to assess high risk and non-standard investments and often failed to understand and identify the correct prudential rules which apply to their business.

The FCA has undertaken a number of enforcement actions against individuals for SIPP advisory failings, including Timothy Hughes and Andrew Rees of 1 Stop Financial Services and Peter Legerton and Lloyd Pope of Tailormade Independent Limited.

Principally, they provided advice to customers on transferring their existing pension funds into unregulated investments such as green oil, biofuels, farmland and overseas property via SIPPs. Between 2010 and 2013, 1,661 customers invested £112,420,985 in these investment products, some of which were not typically permitted by their existing pension schemes.

More than half of the affected customers invested in overseas property operated by the Harlequin Group of companies, which are under investigation by the Serious Fraud Office.

The failures identified by the FCA are highlighted in the Final Notice to Robert Ian Shaw. In particular, amongst other things, the failures identified were:

  • Failure to take reasonable steps to ensure that they assessed the suitability of the underlying product contained within the SIPP for the customer; and
  • Failure to take adequate care to identify, manage, mitigate and disclose conflicts of interest that arose from their business models.

The next steps

As a majority of these SIPP operators are now in liquidation, claims would likely need to be made to the Financial Services Compensation Scheme (FSCS). The FSCS is the UK’s compensation fund of last resort for customers of authorised financial services firms. They pay compensation if a firm is unable, or likely to be unable, to pay claims against it. For example, if a firm has stopped trading or has been declared in default.

Interestingly, on 28th April 2015, the FSCS announced an increase of £32m in its annual levy. The increase is primarily because of a rise in claims relating to SIPPs. This highlighted that the FSCS will levy firms, in the Life and Pensions Intermediation Sector, an additional £100m in 2015/16 to specifically fund the compensation costs for these claims.

How a pension is sold and administered can give rise to a legal claim. This commonly revolves around:

  1. How the Pension trust is administered;
  2. The fees charged by Pension scheme administrators;
  3. How well the Pension performed over its life-time, including any misrepresentations at the point of sale;
  4. Being advised to switch your Pension without being adequately made aware of the risks involved in the new investment;
  5. Failure of the advisor to ensure that the product within the Pension / SIPP is suitable for your circumstances; and
  6. The advisor’s failure to disclose any conflicts of interest.

How can Ellis Jones help you?

Ellis Jones Solicitors has received and acted upon a number of complaints from clients in relation to a mis-sold Pensions and/or Self Invested Personal Pensions and are experienced in advising and dealing with such matters.

If you wish to discuss a potential claim or complaint then please contact Luke Baldwin or William Fox Bregman in our specialist Banking and Finance Litigation Department on 01202 525333.