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FSCS Sipp claims increase 35%

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The Financial Services Compensation Scheme has seen claims involving bad advice to move retirement savings into risky assets in Sipps increase by more than a third.

The lifeboat fund’s annual report and accounts released today show Sipp compensation has increased from £78m in 2015/16 to £105m in 2016/17.

This figure was £10m higher than predicted.

The FSCS said that the trend towards Sipp claims began around two years ago, but claims were now being levied against an increasing number of failed firms who had advised on life and pensions products.

The report explains: “Sipp-related claims typically involve advice given by financial advisers to move pension savings out of existing occupational pension arrangements and invest in other investments within Sipp wrappers. These investments are often high risk and unsuitable for most investors. Their riskiness means some investments inevitably fail and become illiquid.”

Levies on life and pensions advisers totalled £126m in 2016/17, including a £36m supplementary levy to handle Sipp volumes, breaking the £100m annual limit on the class so partly funded across the rest of the industry.

However, investment advisers received a £50m refund on their bills.

Chief executive Mark Neale was paid a total of £292,315, the accounts also show, including a bonus of £32,429.

This was a slight increase on his pay in 2016, where he received a total of £289,227 including a £32,108 bonus.

Bonuses are capped at 20 per cent of basic salary at the FSCS, and chairman Lawrence Churchill’s pay was held at £75,000.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. SIPPs claims? Should this really be called UCIS claims?

  2. the reason the claims have increased is taht all the companies who were putting people money into alternative investments have now set up claims companies to claim the money back through the compensation scheme, they are charging 30% fees to do this.

  3. FSCS pays contractors do they the investigations. They have their own limited companies, are contracted to an agency which in turn is contracted to a big 4 firm. The contractor will earn around £260 a day, QA more and various, superfluous, project managers even more. Everyone gets their cut, so what is actually being paid to the big four firm per person per day?

    Moreover, FSCS is scared to reject any complaints whatsoever, and if a complaint IS rejected and then challenged, it will find a way to pay out. It has no qualms about paying out on these SIPP claims even where the consumer concerned was CF30 at point of sale.

    And we wonder why the levies have gone up!

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