James Hay managing director Tim Sargisson claims that a lack of due diligence among smaller Sipp companies risks damaging the Sipp brand.
He says underperformance of mainstream assets has led to a surge in demand for esoteric investments within Sipps. He claims many smaller players will be unable to cope with the amount of work involved in vetting investments, which could lead to unsuitable investments being allowed.
He says: “We have a very large team of experienced people to look at these investments and we are being swamped with investment requests.
Now if you are a small Sipp provider, I am not sure how you can do the due diligence on those investments.
“I have concerns that the Sipp brand or the Sipp name could become contaminated because it is associated with all manner of questionable investments. You do not want Tony Hetherington popping up in the Mail on Sunday asking, why didn’t the Sipp provider warn clients this was unsuitable?”
Sippchoice managing director Hyman Wolanski says due diligence can be hard to get right but adds it is bigger companies that fail as they do not have the flexibility to cope with investors’ demands.
He says: “It is a big concern for the big providers because they cannot do it properly. They are not geared up for less straightforward investments.
They are much more sausage-machine-type operations.”