Tread carefully when looking for a Sipp provider - IPS
Advisers need to be extra vigilant when undertaking due diligence on self-invested personal pension providers, IPS Partnership has warned.
Following news the FSA has formed a special squad to investigate the operations of smaller Sipp providers the IPS Partnership has created a pack to ensure providers are adhering to the regulator's rules and principles and advisers are gathering all the information required for due diligence.
After contacting 1000 IFAs at the end of July, IPS found more than 20 per cent required assistance in conducting effective due diligence in assessing a Sipp provider.
Some were even unaware the regulation of Sipps had come into force in April 2007, according to IPS.
The pack includes a nine-point checklist that helps IFAs question providers on the quality of systems and controls and administration procedures, financial strength of the organisation and what the firm is doing to prevent fraud and money laundering.
Richard Mattison, business development director of IPS Partnership, said comments made by the regulator and reports of an alleged fraud involving a Sipp provider demonstrated the potential consequences of insufficient information gathering.
He said: "The importance of carrying out robust due diligence has been highlighted twice this year and serious concerns about small Sipp providers have been documented."
Peter Collen, director of Essex-based IFA Crystal Financial Management, said due diligence on all firms, not just Sipp providers, was essential to ensure the client was getting the right sort of company recommended to them.
He said: "We do find there are big differences between Sipp providers. Some are a lot better than others in their flexibility and standard of administration."
