IFAs must assess Sipp suitability – Suffolk Life
Greg Kingston was responding to IFAs Neil Parker, director of Teesside-based Joslin Rhodes, and Carl Lamb, director of Norfolk-based Almary Green – who had both previously warned of the dangers of unsuitable investments being lumped into a Sipp – by saying that it was the advice, not the product, which was at fault.
Mr Kingston said: “From our perspective, we only accept new business through an adviser and we do not operate any of our own investments nor give any advice.
“We therefore must put our faith in the adviser making the right recommendation for each client. To assist, we put a good deal of effort into ensuring our literature, website and other materials are clear, easy to understand and not misleading.
“The advisers’ comments seem to refer to the quality of advice that their peers are giving, and that’s at arm’s length from a Sipp provider’s responsibilities.”
While stating that trustee responsibilities should be taken seriously, and that Sipp providers still need to operate a set of rigorous controls – such as avoiding excessive commissions or repeat business being made into the same, single investment – the underlying responsibility to determine suitability was the role of the adviser.
He added: “The Sipp provider is not required to play ‘goalkeeper’ - it is their role to operate their scheme within the boundaries set by their rules and by legislation.”
Another IFA commented in Financial Adviser’s story on FTAdviser.com: “The Sipp wrapper is a highly tax-efficient way of holding direct commercial property and can generate an attractive yield. If the Sipp trustee starts telling its investors what they can and cannot invest in, the product will lose its attractiveness.
“While there are inappropriate products being sold to investors, it would be to the detriment of the financial services industry if the regulators were to stifle good product innovation (regulated or unregulated) that meets the needs of investors.”
In April this year the Serious Fraud Office announced that 2000 investors may have lost £40m through investing in an insolvent bio-fuel investment company used by 12 to 15 Sipp providers.
In March the FSA set out proposed guidelines on how Sipp operators should yield information to clients on charges and projections.