The FSA has launched an investigation into firms offering Sipp advice as part of scheme for clients to invest in high-risk underlying, unregulated investments which are not advised on.
In an alert the regulator expresses concern over advisers moving clients’ retirement savings to Sipps which hold wholly or mostly high-risk, unregulated investments such as diamonds, overseas property developments, store pods, forestry and film schemes.
The FSA says it has secured a variation of some adviser firms’ regulatory permissions to stop them operating in this way.
It says: “The cases we have seen tend to operate under a similar advice model. An introducer will pass customer details to an unregulated firm, which markets an unregulated investment. When the customer expresses an interest in the unregulated investment, the customer is introduced to a regulated financial adviser to provide advice on a Sipp capable of holding the unregulated investment.
“The financial adviser does not give advice on the unregulated investment, and says it is only providing advice on a Sipp capable of holding the unregulated investment. Sometimes the financial adviser also assists the customer to access monies held in other investments so that the customer is able to invest in the unregulated investment.”
The FSA has called on Sipp providers to report such firms to its whistleblowing team on 020 7066 9200.