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Watchdog warns over Sipp claims

IFAs could face misselling allegations after the Chancellor’s U-turn

Advisers who recommended clients to set up Sipps to invest in residential property from A-Day could now face misselling claims, warns the Financial Ombudsman Service.

Despite residential prop- erty being permitted in Sipps from A-Day under the Finance Act 2004, Chancellor Gordon Brown’s pre-Budget report shock U-turn last week means that advisers could still be held liable.

IFAs’ frustration is being compounded by the Revenue still offering consumers advice on property in Sipps on its website.

FOS spokesman David Cresswell says IFAs could be liable because they had a duty to make it clear to their clients that putting residential property in Sipps after A-Day was only a possibility.

He warns that the FOS will investigate complaints from clients who claim to have suffered a loss from cashing in regulated investments or switching existing pension arrange- ments into a Sipp based on advice to invest property in the wrapper.

But Cresswell adds that complaints based on losses made purely from clients putting property into a Sipp is outside the ombudsman’s jurisdiction as property and Sipp wrappers are unregu- lated. IFAs who advised their clients to buy property off- plan are also off the hook from the FOS but could potentially face legal action.

Informed Choice managing director Nick Bamford says: “It not only shows a woeful lack of joined-up thinking but the hypocrisy of the Government which is not meeting the standards it sets for advisers. It is completely disingenuous for the FOS to use hindsight when at no point before the pre-Budget report did the FOS or the FSA warn advisers that this might not happen.”

Aifa director general Chris Cummings: “IFAs did not ask for this. We will be monitoring anything that sounds like a regulatory warning against advisers who simply respon- ded to client demands to discuss property in Sipps.”

An HMRC spokeswoman says: “Sometimes, it takes some time for information to cross-pollinate.”


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