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Sipps must stop being a gateway to bad investments

Sipp providers must clean up their act when it comes to vetting investments for clients, says Clarke Willmott partner Philippa Hann.

At the Pension Debate in London today, Hann argued the judgment against Berkeley Burke – which it is currently appealing –  should make Sipp providers stand up and review their due diligence processes.

Hann predicted the judgment will increase the number of complaints the Financial Ombudsman Service has to handle compared to the ones about advisers.

She also pointed out the Berkeley Burke ruling has put Sipp providers in an “unenviable position” and allows the FOS to do act purely on what it wants.

If the hearing was not a judicial review but in a civil court, then Berkeley Burke might have won the case, she said.

Hann also said it will be interesting to see what the Carey Pensions judgment says compared to the Berkeley Burke ruling when it is published.

She recommended Sipp providers must get their contracts in order, know conduct of business rules and understand what good industry practice is in order to minimise any fallout from Berkeley Burke.

Hann added: “It is time for Sipp providers to take responsibility [for vetting investments] as they are not a bucket into which any crap can be poured.

“The problem area is where people have been cold-called by an introducer and go through an execution only action process where they suffer financial damage. Sipps are the gateway to bad investments and they should take responsibility for them.”



Berkeley Burke loses High Court appeal against FOS

Embattled Sipp provider Berkeley Burke has lost its judicial review in a landmark High Court ruling published today. The ruling is over a longstanding dispute between Berkeley Burke Sipp Administration and the Financial Ombudsman Service. The judgment establishes with greater certainty whether Sipp providers have a duty of care to vet unregulated investments for their […]


Berkeley Burke: We will defend our position through appeal

In a response to the High Court judgement against Berkeley Burke for failing to carry out adequate due diligence on a £29,000 unregulated collective investment scheme, the Sipp administrator has released the following statement exclusively to Money Marketing: “Berkeley Burke Sipp Administration Ltd (“the Company”) notes the ruling in the judicial review and, on legal advice, will be seeking leave to […]

Berkeley Burke judicial review set for autumn hearing

A judicial review into a Financial Ombudsman Service determination that will have wide implications for Sipp providers is due to be heard in London this autumn, Money Marketing can reveal. The case concerns a longstanding dispute between Berkeley Burke Sipp Administration and the FOS. In 2014, the FOS ruled against Berkeley Burke for failing to […]

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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Sensible words albeit a reiteration of what was applicable at the time and what many investors believed was happening.

    Sipp Trustee can’t just simply approve an investment as ‘sippable’ on the word, nod and wink of unknown individuals seeking investments into their own proposed investment scheme without proper due diligence. Likewise they can’t then blindly facilitate specific investments introduced and arranged by the same unknown unregulated individuals operating totally at arms length from the actual client through the same unregulated introducers.

    Some scams are complex and hard to detect others are recognisable with common sense provided of course you don’t let easy fees cloud your vision

  2. Just an idea, but is a pension really the ideal vehicle for someone to invest in esoteric/ obscure/opaque/unregulated investments?

    If pensions were restricted in a similar way to ISAs (i.e. recognised investments, but add commercial property?) there would be far fewer opportunities for the crooks to exploit.

    FSCS levies rise every year as do the number of claims; someone needs to deal with this more urgently than is happening.

    • That somebody is the regulator which, one might reasonably think, is surely obliged to check compliance with its own guidelines.

      James Hay’s list of permitted investments via their SIPP appears to be a model of compliance, albeit drawn up somewhat late in the day.

  3. Agree in principle but if SIPPs are tackled, won’t the issue move elsewhere?

    Before freedoms it was ‘unlocking’. I’ve not seen such a case since 2015 and yet unregulated ‘stuff’ is still causing harm.

    What needs tackling is the apparent root cause of the detriment – Unregulated investments which aren’t appropriate for ‘the public’ and the fact commission can still be paid (which can only increase the likelihood of sales of such ‘investments’).

  4. Martin Martin has it right. The SIPP shouldn’t be a SIPP at all, but a personal pension which allows commercial property. Perhaps high net worth/sophisticated investors need a ‘true’ SIPP – but then certification needs tightening up.

    However that isn’t what the regulations say (although with hindsight that is now up for debate, as is so often the case), and I feel sorry for SIPP providers who have given investors what they wanted, indeed vociferously demanded – and it now turns out that when investors find they have bought a lottery ticket which doesn’t win they feel they should get their stake back.

    Well I feel sorry for investors too, they were naive and stupid, and taken advantage of – and there really needs to be more focus on chasing down the true culprits, the introducers, and the dodgy investments, and dodgy ‘managers’, and getting a decent level of recompense from the criminals who benefit from this vile trade in retirement misery.

  5. Several years ago the FSA/FCA published guidance on the responsibilities of SIPP providers when it comes to vetting investments for clients ~ and then did NOTHING to check whether those guidelines were being followed, which, as we now know, in many cases they weren’t. Given the relatively small number of SIPP providers, checking compliance with those guidelines wouldn’t even have been a particularly resource-hungry exercise. All that would have been necessary is a few extra questions on whatever regulatory returns that SIPP providers are (presumably) required to submit periodically (and then, of course, for somebody at the FCA actually to make the effort to look at the data). So what was the point? Was the FCA so naïve as to assume compliance and that no checks would be needed?

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