Conflicting stances from the Pensions Ombudsman and the Financial Ombudsman Service on self-invested personal pension liability has been branded “madness”, as the two bodies enter talks to hammer out an agreement on the issue.
Pensions lawyer Penny Cogher, partner at solicitors Irwin Mitchell, said the contradictory opinions of the two ombudsmen stoked uncertainty for investors.
She said: “There are two contradictory decisions - it is just madness. This becomes quite crucial when you have got two ombudsmen taking a different view on something that is quite a significant issue.”
Ms Cogher branded the Pension Ombudsman “a lone voice”, on the issue, and argued in favour of the position seemingly held by the Fos that Sipp providers should be liable.
The differing opinions between the two ombudsmen is highlighted by the Berkeley Burke case.
Each service dealt with a case about investments into Green Oil plantations where the client complained about a lack of due diligence on behalf of Berkeley Burke.
The Pensions Ombudsman found in favour of Berkeley Burke on the basis that it was not the company’s responsibility, as trustee and administrator of the Sipp, to carry out the level of due diligence the complainant suggested.
But an ombudsman at the Fos found in favour of the client, because Berkeley Burke failed to ensure the investment was suitable.
Since this decision the Fos has been reviewing the case after talk of a judicial review into the decision.
“I think Sipp providers have to take more notice of Fos, because that is where their regulation lies,” Ms Cogher said.
A spokesman for the Pensions Ombudsman said: “We are in discussions with colleagues from the Financial Ombudsman Service to agree the best way forward on managing complaints around personal pensions where there is an overlap between our services.
“This will ensure there is consistency and certainty for the public when they ask for help to resolve their pension problems.”
The Financial Ombudsman Service declined to comment.
An FCA spokesman said in its guide for Sipp operators published in 2013, it said if firms are involved with Ucis they should ensure they have enhanced procedures in place, undertake appropriate due diligence and keep all research under regular review.
Adviser View
Malcolm Steel, a chartered financial planner with Edinburgh-based Mearns & Company, said: “I can sympathise with both views but for me the liability for the advice we give sits firmly with us.
“All financial services firms should have some duty of care for their clients and I don’t think it is right that the Sipp provider can say this is nothing to do with me.”
