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‘Sipp market full of backhanders’

The Sipp market is rife with “backhanders” and providers pocketing undisclosed earnings, industry insiders claim.

Pal Partnership business development manager Richard Mattison says the most common source of undisclosed earnings are from interest rates on cash. He says interest rates paid on cash held in Sipps can vary by as much as 3 per cent and many providers receive one rate from the bank across the cash held in its Sipp book but pay less to clients and pocket the difference.

He says some Sipp providers operate panels of lenders, solicitors and property managers for customers wanting to hold commercial property in Sipps and add on undisclosed sums if clients go outside the panel.

Mattison says these forms of non-disclosed earnings and payments often represent an essential income stream for low-charge Sipps and it is unclear whether regulation next April will curb this.

He says: “The Sipp market is full of backhanders. Interest rates from banks is the big one as there are millions of pounds from Sipp customers sitting in bank accounts.”

Suffolk Life director of sales and marketing John Moret says: “Some companies are not disclosing as much as they could and are earning more money in interest than from charges.”

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