SFO reports Sipps fraud rise as it probes illegal schemes
Jane de Lozey, joint head of the fraud business area for the SFO, said the agency had seen instances of suspected fraud related to Sipps rise over the past year.
She said: “People are being encouraged to disinvest their pensions and put them in highly speculative schemes. Examples of this type of fraud have ramped up in the past 12 months.
“We are in regular touch with our anti-fraud partner agencies to share intelligence and get a better picture of the potential threat to investors. The value of these scams in terms of money invested or at risk exceeds £200m.”
Ms de Lozey revealed investigations are under way into three cases, with half a dozen more “potential situations” on the radar.
She said the SFO’s investigation into the £52m GP Noble pension scheme fraud demonstrated how opportunists could “smash and grab” pensions, adding: “The danger is that it is only when people retire and try to claim their pension they will find out that it has all been spent.”
In April this year the SFO announced that 2000 investors may have lost £40m through investing in an insolvent bio-fuel investment company used by 12 to 15 Sipp providers.
Ms de Lozey declined to comment on exact details of the investigations but said they tend to involve either bio-fuel or property investments. She added some of the Sipps under investigation would have been advised, and warned that IFAs should be careful when advising on these schemes. She said: “We have seen many IFAs who are getting caught in the middle.”
The FSA, which is responsible for monitoring Sipps, is due to publish a consultation on Sipps.
A spokesman for the FSA said: “We have been conducting a thematic review of Sipps and the findings will be released in the next couple of months. Fraud is one aspect at which we are looking.”
She added there was no fixed date for the Sipp consultation paper.
Greg Kingston, head of marketing at the Sipp provider Suffolk Life, said the anticipated regulatory document on capital requirements for Sipps could limit the scope of “dodgy schemes”.
He said: “It is likely the FSA will say the greater the risk of the investment, the more capital a provider will have to put aside. This could affect dodgy schemes because if you wanted to hold more esoteric investments in a Sipp, the Sipp provider would have to put aside more capital. If you do not have the money, you would not be able to hold the investment.”
Mr Kingston insisted there is still a lot of quality in the Sipp market, but warned that some providers are at risk of being complicit in supporting dubious schemes by allowing them to be used.
Last month, IFAs warned that consumers risked being lured into unsuitable investments within their Sipps.