The Financial Services Compensation Scheme has issued a warning over Sipp advice as it reports a 15 per cent increase in life and pensions intermediation claims.
The FSCS’s annual report, published this week, shows it received 4,248 claims relating to the life and pensions intermediation class in 2013/14, up 15 per cent on the 3,691 claims received in 2012/13.
It upheld 45 per cent of life and pensions intermediation claims in 2013/14, compared to 50 per cent of claims the previous year.
The FSCS says the increase is down to a rise in Sipp claims and continuing, although relatively low, volumes of mortgage endowment claims.
FSCS chief executive Mark Neale says: “I am increasingly concerned by the growing number of claims FSCS has seen in the past year arising from the wrong advice being given to consumers to move retirement savings out of occupational schemes and into risky assets held within Sipps.
“We strongly support the action the FCA has taken to address this.”
Neale received pay of £290,463 for the period. It includes a basic salary of £246,891 and a £43,000 bonus. The FSCS also contributed £32,000 to Neale’s pension.
The report also revealed the FSCS is reviewing a £1m project begun in 2011 which the scheme hoped would allow it to deliver payments electronically.
The FSCS declined to comment on the spend or the status of the review.
The FSCS received a total of 39,258 new claims from consumers during 2013/14, 37 per cent lower than the number of claims received in 2012/13, which it puts down to falling numbers of payment protection insurance claims.
Total compensation was £243m in 2013/14, down from £326m in 2012/13.
The FSCS says 44 per cent of claims are made through claims management companies. It says claims firms are most active in claims relating to mortgage endowments, PPI, mortgage intermediaries and stockbroking.
The FSCS received 7,823 investment intermediation claims in 2013/14, down 36 per cent on the 12,300 claims received in 2012/13.
It upheld 83 per cent of claims in 2013/14 in this sub-class, compared to 90 per cent of claims in 2012/13.
Susan Hill, chartered financial planner, Susan Hill Financial Planning
The majority of advisers wouldn’t go near the sorts of investments that are causing these problems. It worries me who is doing this, and I think they should be naming and shaming those that are to help to protect investors.
Jaskarn Pawar, financial planner, Investor Profile
If it is a proper claim then that’s fine, but claims management firms are always looking into new areas to grow their business and they seem to have hit on financial services and advice. It’s an unfortunate development and I don’t like it at all.