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‘Property in Sipps could be the next misselling debacle’

Property in pensions is likely to be the next big industry misselling scandal as Sipps hit the mainstream, warns Informed Choice managing director Nick Bamford.

Bamford, speaking to an IFA briefing at Money Marketing Live at Olympia in London last week, cautioned that there is a significant danger that clients will be seriously overexposed to property after A-Day if they pile residential and buy-to-let properties into their Sipps.

He said: “Pensions in property misselling could well be the next big issue for the FSA.”

Hornbuckle Mitchell dir- ector Neil Marsh said product providers must place strict controls on how they accept property investments so that if any there is any abuse of the system, the responsibility lies solely with the client rather than with the provider as the trustee.

He says providers will need to insist that clients use professional property management companies to run properties and add caveats to their terms and conditions to protect the provider.

Independent pension consultant Ros Altmann says while holding the bulk of your pension assets in one illiquid property is as high risk as being purely invested in equities, it may encourage those whose property is their sole asset to provide for their retirement.

She said: “Why not help people’s pension investment by letting them put the one big asset they have got into their pension? But relying only on property is dangerous.”

Marsh said: “Clients will have to use a property management specialist or themselves sign that they take on the responsibility of any abuses.”

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