AJ Bell calls for FSA to bring back Sipp investment list
AJ Bell has called on the Financial Services Authority and HM Revenue and Customs to consider moving back to having a permitted investment list for self-invested personal pensions as there was prior to A-Day in the wake of recent fraud scandals.
Billy Mackay, marketing director at the firm, told FTAdviser that prior to April 2006 a permitted investment list was in place that dictated what could and could not be placed on Sipps. He said reinforcing this list could be a way of mitigating risks for clients, advisers and providers.
Several recent scandals have brought attention once again to business placed through Sipps. In the wake of two cases recently several providers spoke to FTAdviser and gave conflicting views as to whether they were responsible for providing a ‘gatekeeper’ role.
The FSA simply pointed to its factsheet for Sipps firms, which says: “Although the client’s advisers are responsible for the Sipp investment advice given, as a Sipp operator you have responsibility for the quality of the Sipp business you administer.”
Recent cases include that of an insolvent bio-fuel investments firm involving Jatropha tree plantations in South East Asia, which is currently under investigation by the serious fraud office.
Some 2,000 investors may have lost around £40m through investing in the insolvent company through 12-15 Sipps providers, according to the court-appointed management receiver for the firm.
In another case Greyfriars Asset Management sent warning letters to clients and spoke to IFAs after Nottinghamshire Police confirmed it had arrested two people in relation to property investment firm Arck LLP, which marketed investments in a holiday complex in Cape Verde.
FTAdviser was told by law firm Regulatory Legal that case could amount to around £60m in claims.
Although AJ Bell did not place either investment on its Sipp, Mr Mackay believes that providers looking to provide a full and flexible service would benefit from the certainty of a proscribed list of allowable investments.
He explained that since A-day, the firm has more than 3,000 investment requests which have been considered to sit on the Sipp.
Mr Mackay said: “We have a dedicated team and anything that is requested will be looked at to check what the risks are. If there is any reason to be concerned, we will say no.
“Sipps providers might want to refer back to that list. It’s a simply way of seeing what structures the government would allow at the time. It worked pre-A-day and would still work now.
“I don’t think it is unusual to consider these aspects and to go back to pre A-Day is an easier solution. No one was crying out for the permitted list to be removed and if you asked any providers they would all agree that they did not have any problems with it.”
“It [would] give providers, advisers and clients certainty about what should be held on Sipp [and] all issues of uncertainty could be avoided.”