Emma Ann Hughes  

Anger at picking up other’s Sipp mess

Emma Ann Hughes

Emma Ann Hughes

Bad self-invested personal pension advice continues to dog the sector.

This week the Financial Services Compensation Scheme revealed pension advisers will almost certainly be levied again because claims linked to life and pensions advice will cost much more than it thought earlier in the year.

The actual forecast for this class of claims is now £136m for 2016 to 2017, up from £98m, an increase of 39 per cent.

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Minus some £12m brought forward from last year, that leaves life and pension advisers having to make up a shortfall of £29m, most likely via an interim levy in January.

This news has once again outraged those advisers still operating in the industry.

Hard-working advisers must once again pay for the poor advice of those who have gone bust by recommending dodgy investments or pushing inappropriate pension transfers.

I have a lot of sympathy for those who have to pick up the mess left by those who have now fled the industry.

You don’t see the likes of KFC having to compensate customers of some dodgy backstreet kebab shop because it food poisoned their diners and then swiftly shut up shop.

The number of Sipp-related claims at the FSCS has increased by 59 per cent this year.

The FSCS has received claims against 171 firms in total; four of those firms account for 73 per cent of the compensation paid. 

Was the amount of Sipp business and pension transfers by these four firms not a cause for concern for the Financial Conduct Authority when these businesses filed their Gabriel returns?

It should have been a massive red flag.

While I am pleased the way the Financial Services Compensation Scheme is funded is currently being reviewed, to me work is also urgently needed to address why so many complaints about firms end up being dealt with by them.

The regulator requires so much information from firms these days. Why weren’t these four firms prevented from recommending ropey deals to investors before they added to the financial burden of hard-working, still operating advice firms?