Conflicting stances from the Pensions Ombudsman and the Financial Ombudsman Service (Fos) on self-invested personal pension (Sipp) liability has been branded “madness”, as the two bodies enter talks to hammer out an agreement on the issue.
Penny Cogher, pensions partner at solicitors Irwin Mitchell, said the contradictory opinions of the two ombudsmen stoked uncertainty for investors.
Ms Cogher 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.”
She branded the Pension Ombudsman “a lone voice”, on the issue, and argued in favour of the position seemingly held by 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.
However, an ombudsman at Fos found in favour of the client, because Berkeley Burke failed to ensure the investment was suitable.
Since this decision, 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 that there is consistency and certainty for the public when they ask for help to resolve their pension problems.”
Fos declined to comment.
An FCA spokesman said in its guide for Sipp operators, which was published in 2013, that if firms are involved with unregulated collective investment schemes they should ensure they have enhanced procedures in place, undertake appropriate due diligence and keep all research under regular review.
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.”