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Advisers urged to provide better evidence for Sipp and pension transfers

Advisers are being urged to strengthen their justifications for Sipp and pension transfers, following a spate of recently upheld Financial Ombudsman Service decisions.

Compliance consultant Adam Samuel says many advisers are “not very good” at evidencing the reasons for pension transfers.

He says: “Advisers have to explain exactly why they are recommending a transfer to a Sipp.

“It is no good stating greater flexibility if the funds recommended, or their equivalent, are available under the old policy. There has to be a real reason and it must be in the suitability report.”

Samuel says advisers should also take into account future advice fees when making comparisons.

He says: “Charge comparisons between the existing and future pension must be made accurately, taking into account the real cost of advising on the Sipp investments compared with the existing plan.

“This is not a field for beginners, or people doing transfers so as to be able to charge for advising on the resulting investments.”

The latest FOS complaints data shows Sipp complaints increased by 123 per cent between Q3 and Q4 2013, from 176 to 393, of which 56 per cent were upheld. Year-on-year, complaints rose by 166 per cent.

The FOS has also upheld a number of complaints against high profile advisers in recent months relating to pension transfers.

It upheld a complaint against Openwork for transferring a client into a higher-charging pension fund without justification, and a complaint against Mattioli Woods for unsuitable advice to invest in a property syndicate following a Sipp transfer.

Hargreaves Lansdown head of advice Danny Cox says: “Proper documentation is a crucial part of the advice process, so the customer understands what you are recommending and why, and to back up your advice if it is challenged.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. “not very good”

    Sounds like primary school

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