FOS report an 34% increase in SIPP/SSAS Complaints in 2016/2017

19 June, 2017

The Financial Ombudsman Service (FOS) has reported it handled 5,160 pension complaints in 2016/2015 which represents a 15% increase from the previous year. The biggest rise was in respect of complaints connected to small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs). There were 1,574 such complaints, representing a 34% annual increase.

Perhaps, this is an unsurprising statistic.

SIPPs and SSASs are types of personal pension that allow a person more freedom and control over their pension pot. SIPPs are designed give experienced and sophisticated investors flexibility to determine precisely how their pension pot is invested.  SSASs are particularly well-suited for business owners who are looking for a way to make the most of existing or future pension funds to support their company.

In recent years, and particularly after the pension freedom reforms announced in 2015, there has been a worrying number of retail customers who have been persuaded to transfer their pension pots out of traditional pension plans and transfer into risky, illiquid and speculative non-standard investments (NSIs) held within their SIPP or SSAS.

On 22 May 2017, the Serious Fraud Office announced that it has opened an investigation into the Capita Oak Pension and Henley Retirement Benefit schemes, Self Invested Personal Pensions (SIPPs) as well as other storage pod investment schemes. The investigation includes the Westminster Pension Scheme and Trafalgar Multi Asset Fund which invested in other products. The amounts invested total over £120m.

A NSI is an investment which FCA does not consider to be a “standard investment”. The Financial Conduct Authority’s (FCA) current list of “standard investments” contains assets that are easy to value and liquid. These include; deposit accounts, London Stock Exchange & Alternative Investment Market listed shares, Government and local authority bonds, corporate bonds and unit trusts.

NSI’s can take various forms from commercial property schemes and overseas property developments to carbon credits and storage pods. Common features are that the investments are;

  • speculative
  • unregulated
  • illiquid
  • hard to value
  • difficult to sell because there is no recognised secondary market

By their nature pension investments are long term. The problem for an investor is that many years can go by before the true difficulty of an investment can come to light. Because NSIs are difficult to value, the valuations received from a SIPP or SSAS provider will not usually identify a true market value but a “book value” placed on the investment by the provider, therefore an investor could be sitting on a valueless investment and not even realise it. It is therefore important that advice is sought at the earliest possible opportunity.

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at pradeep.oliver@crippspg.co.uk  or call 01892 765453 for a no obligation consultation.