The regulator knew that there was room for concern as early as 2007. Could a stricter position on SIPPs prevented thousands of people from losing their savings?
It is now over eleven years since the FCA (then the FSA) officially began regulating SIPPs (Self-invested personal pensions). At the time, the market was booming, with providers promising huge returns and advising clients to transfer money from existing personal pension schemes.
This prompted fears that advisers were simply churning pension business to cash in on commission, which was set at a high rate.
John Tiner, CEO of the FSA in 2007, was ready to do battle with any dubious financial advisers in this sector. He said at the time:
Advice to switch into SIPPs should be suitable – reflecting the customer’s needs, priorities and circumstances – and not influenced by commission payments.
Why, then, eleven years later are we seeing a 77% increase in claims against advisers for mis-sold SIPPs?
Regulator slow to respond
The huge increase of claims today points towards a lack of action by the FCA all those years ago. The regulator was sending out newsletters to advisers that stated thing like:
‘we remind firms that the initial presumption with any pension transfer is that it is not suitable’
But were they doing everything in their power to ensure advisers listened? December 2008 saw a thematic review on the quality of advice on pension switching, which confirmed “providers are not required to ‘police’ the performance of individual distributors”.
With an ever-changing market over the past 10 years, the FCA needed to have their finger on the pulse of these advisers selling SIPPs to prevent what many are calling the biggest claims scandal since PPI.
Now, tens of thousands of people who may have been mis-sold a pension transfer are being left with no real solution. The scale of the problem is such that financial advisers are unable to take out insurance against claims, leaving the highest amount to be claimed being £50,000 if it is through the FCA.
According to the regulator, up to a third of pension transfers are based on faulty advice, or potentially 30,000 cases a year. It was hoped back in 2007 that the watchful gaze of the then FSA would concentrate the minds of financial advisers to prevent a scandal like this. It would appear that they have failed this task.
How can Smooth Commercial Law help?
At Smooth Commercial Law, our team of experts have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing more and more mis-sold SIPP claims, and have managed to secure compensation for many of our clients.
Should you have a claim we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.
You can contact our experienced team by calling 0800 051 2578 or by emailing info@smooth-commercial-law.co.uk