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FSCS declares four advice firms in default after Sipp claims

The Financial Services Compensation Scheme has declared four advice firms in default following compensation claims relating to Sipp transfers against them.

The FSCS says it has received an increasing number of claims against advisers that are no longer trading in relation to advice to transfer existing pension schemes to Sipps.

As a result of its investigations into Sipp claims, it has declared the following firms in default: TailorMade Independent, 1 Stop Financial Services, Kynaston-Carnoustie Financial Consultancy and Crawford Scott.

The FSCS says it will begin processing claims against these firms in September, and expects to see more failures of this nature.

In April the FCA banned 1 Stop Financial Services partners Andrew Rees and Timothy Hughes for suitability failings in Sipp advice.

The two men were ordered to pay their £490,100 fine to the FSCS in the first instance of a fine being paid to the compensation scheme.

Tailormade Independent was formerly a distributor of Harlequin Property. In March 2013, the FSA imposed restrictions on Tailormade Independent around the disposal of assets and prevented the firm from carrying out new pensions business.

In the FSCS’s annual report earlier this month, chief executive Mark Neale said he was “increasingly concerned” about the rising number of Sipp claims.

The FSCS received 4,248 claims relating to the life and pensions intermediation class in 2013/14, up by 15 per cent on the 3,691 claims received in 2012/13.

It says this is down to a rise in Sipp claims and continuing, although relatively low, volumes of mortgage endowment claims.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. This is just the tip of the iceberg. There are plenty of con artists out there, posing as independent and trustworthy advisers, who have made fortunes at the expense of vulnerable and often elderly ordinary people.

    Let’s hope the FSA flushes them out .

  2. These people are fraudsters, many ex financial advisers who failed to gain their qualifications and who have a knowledge of the pensions industry. They are unregulated. They have been going around their old clients and encouraging them to transfer their pension pot into Harlequin via SIPPs.
    We who are regulated would face court action if we were found to be providing fraudulent advice.
    These unregulated cowboys will get away with it.

  3. Julie McIntosh 29th July 2014 at 3:00 pm

    Well said Lawrie Hainey. I agree with everything you have said. This should be clamped down on urgently. As usual it will be regulated advisers who will end up footing the bill. Those introducing clients to this to make their big commissions should have severe financial consequences too.

  4. Bring it on !! 29th July 2014 at 9:40 pm

    If you receive advice from an unregulated adviser you should not have the benefit of FSCS. When clients see that certain safety nets only exist via authorised / regulated advisers (a quick search of the FCA register should help them check credentials) they may take adviser selection more seriously.

    Of course then FCA can see the information being put through their register search and if too many searches are requested for a non-regulated firm they had advance notice of a possible issue and should take action.

    The FCA/MAS/FOS/FSCS can then spent some of their time educating clients on how to find advisers that offer all of the required safety nets, rather than bashing the sector as a whole.

    • wayne bateman 11th May 2015 at 8:14 pm

      This all is very well when stated by someone who obviously has some financial acumen, however please remember that these conmen, like most conmen, target the vulnerable and easily exploited and surely these victims should be able to seek assistance from FSCS in putting things right.

  5. “Bring it on” I understand your message but the regulator is impotent when at the outset the client receives advice from an unregulated/qualified adviser who has probably came from a tied home service company like CIS, Pearl, Refuge etc. . These client have probable known and trusted these advisers of a long number of years, and are now being fleeced. This is simply fraud and it is happening out there. Most clients will not search the FCA register , especially when they have known the unqualified adviser for a long number of years. The majority will never have heard of the FCA register.

  6. I mentioned on another article that pension products should never fall under unregulated rules. The article was talking more about the products and underlying investments but i think that should also to apply to the advice given regarding pensions.

    It is my understanding that one of the FCA’s priorities is the protection of consumers. Surely an important part of this is clamping down on unauthorised advisers conning people out of their pension pots. The damage that unauthorised advisers do to the reputation of the advice sector and financial services in general is disproportionate to their numbers. They are very much in the minority but more column inches are devoted to these type of advisers ripping clients off for thousands than any good the authorised majority will ever do.

    Providing unauthorised unregulated “advice” on retail investment and pension products should be a crime punishable by prison and significant fines.

    Just my humble opinion as usual.

  7. There is a fortune to be made by the first person who sets up an internet based Tripadvisor type site that enables members of the public to record their experiences and give performance ratings to IFAs and financial advisory organisations.

    A combination of name and shame and praise when it is due. Only the crooks and the incompetent should have any concerns about this approach.

    My guess is that such a site would have huge potential for attracting advertising revenue from the financial products industry.

    My fingers are certainly itching to tell about my experiences at the hands of a financial advisory business that is still looking for prey in the Manchester area and I am sure that there are many like me.

  8. Rebecca Aldridge 1st August 2014 at 5:29 pm

    @tonybrown VouchedFor.com does exactly that and should have a listing for every active adviser.

  9. Thanks for your suggestion, Rebecca. I have had a look at the website and, although potentially useful, it far from fills the bill, in my opinion, from a client point of view.

    I looked at about twenty ‘testimonials’ at random and they were all highly favourable. I did not find a single comment from a client criticising an IFA or warning potential customers to avoid her or him. Maybe I was unlucky in my selection.

    What I am looking for is a simple performance assessment tool and platform for comment that would be welcomed by IFAs who are capable and trustworthy and feared by those who are not.

    By the way, I did not find any mention of the IFA , operating in Manchester, who continues to lead the high life after gouging big chunks in the SIPP funds of a number of older people who could ill afford to be ripped off.

    Thanks again.

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