Advisers are being encouraged to probe self-invested personal pension (Sipp) providers they may work with for details of their ombudsman complaint records.
Sipp provider Curtis Banks has suggested regulatory information from the Financial Ombudsman Service (Fos) could provide a valuable insight into how well a firm is run and the investments they hold.
Investors unhappy with the service they have received from a financial company are entitled to take their complaint to the Fos if they feel it has not been satisfactorily dealt with by the firm concerned.
There has been a steady rise in Sipp enquiries taken to the Fos in recent months, latest ombudsman data shows.
Between July and September this year there were 767 enquiries about Sipps compared with 435 enquiries in the same period last year, a considerable year on year increase of 76 per cent.
The number of enquiries converted into actual complaints about Sipps in the second quarter of the Fos financial year 2017 (April to April) was 498, up 55 per cent from the 321 cases between July and September 2016.
According to a freedom of information (FOI) request from Curtis Banks, the Fos investigated 1,310 complaints about Sippss in the first half of this year. Of these 706 were resolved with 57 per cent of cases upheld in favour of the consumer.
It is unclear, how many Sipp providers were included in the data as the ombudsman did not provide a breakdown by firm, Curtis Banks said.
Pension technical manager Jessica List said: “Complaints to Fos indicate that not only has a complaint been made to the Sipp provider, but also that they’ve been unable to resolve it to the investor’s satisfaction.
“Advisers should be prepared to question Sipp providers on the number of FOS complaints they receive and the number that are upheld. This should be relative to the size of their book and the breadth of their proposition.”
She added many of the complaints related to the investments within the Sipp rather than the Sipp itself.
“A high number of Fos referrals, together with a high uphold rate may indicate to advisers the poor quality business that a Sipp provider has accepted and that there may be further trouble ahead. It should become an important metric for advisers to use.”
Adviser and partner at advice firm Castlefield, John Ditchfield, agreed requesting information on Fos records was a “good idea” despite not being standard practice.
“It’s not something I’ve been involved in but it’s something that we maybe should be looking at in the future.
"We only deal with large established providers with excellent market records so these things don’t tend to be an issue but if you were going to a niche provider you should probably be doing it.”
It is not entirely clear to what extend providers should be responsible for the the underlying investments in their Sipps.
In 2014 the ombudsman ruled against provider Berkeley Burke in a case that involved a high risk unregulated investment in biofuels.
The decision was initially hailed as a game changer but the file was reopened after the Sipp operator called for a judicial review of the decision, which is still pending.
Meanwhile, the Financial Conduct Authority requested information from Sipp providers on their non-standard investments in September.
In a letter to providers the regulator said it would use the information to help inform any decisions on whether it wishes to undertake further supervision work within this area.
