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NU warns of Sipp crackdown

Norwich Union fears too many people have been put into Sipps and the FSA will crack down on advisers and providers that cannot justify sales.

Sipp sales have rocketed by 115 per cent over the last year and took in 2.5bn in the first half of 2006 alone, according to the Association of British Insurers, but NU says the minor changes to the product over the past year fail to justify this recent explosion.

NU head of pensions Iain Oliver says media hype is leading many people to pressurise advisers into recommending a Sipp. He says some firms are exclusively focusing on Sipps and are likely to be targeted by the FSA if they cannot prove their clients required added flexibility and were not better suited to a stakeholder or personal pension than a typically higher-charging Sipp.

The FSA has already raised concerns about the need for firms to justify why they put their clients into Sipps.

Oliver says: “People should not be advised to invest in expensive Sipps unless the investment choice they want is not available in a personal pension. Based on previous guidance from the regulator. I would expect it to see this as low hanging fruit.”

Standard Life head of pensions policy John Lawson says: “The FSA should investigate firms that are charging hig- her initial commission to get customers into an inferior product. Our Sipp starts at 1 per cent compared with 1.5 per cent for a stakeholder which has fewer funds.”


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