IFAs who failed to consider small self-administered schemes in their advice to clients when banks cut back on small business lending could face accusations of misadvice, says Rowanmoor Pensions.
A Ssas allows the sponsor company to take a five-year loan of up to 50 per cent of the net market value of the scheme’s assets.
Head of technical services Robert Graves says such a facility could have eased cashflow strains for certain firms during the economic downturn.
He says IFAs who ignored it as an option in favour of the “ubiquitous Sipp” have left themselves open to potential complaints. He says: “If an IFA has not even considered offering a Ssas as an option to their client, they are leaving themselves open to accusations of misadvice.”
Graves, who is also chairman of the Association of Member-Directed Pension Schemes, adds: “A Ssas is still a valid and important tool for small businesses in particular. The primary reason at the moment is around the lack of accessible credit from banks to those small businesses.
“Therefore, had a financial adviser advised a client to have a Ssas rather than an individual Sipp, they could well be in a better position than they find themselves now.”
Bloomsbury Financial Planning partner Jason Butler says: “The fact that you do not offer a Ssas in itself is not bad advice if there was not an identified need for lending or borrowing in the terms of reference.
“A loan from a pension cannot be used to keep an ailing business afloat. Do not confuse cash burning when a business is in decline with the need to grow the business.”