Emma Ann Hughes  

Can a Sipp really be mis-sold?

Emma Ann Hughes

Emma Ann Hughes

Once upon a time, self-invested personal pensions (or Sipps for short) were painted as the cure for all past personal pension ills.

Fed up with some provider dictating the risks you should take with your savings to accrue a retirement income?

Here was a pension wrapper – importantly with 'self-invested' in the product’s title - that allowed you to take control.

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Finally rather than have a pension provider choose how much of the pound in your pocket you should be risking at different stages in your life, you could decide how adventurous you wished to be when accruing cash to spend in later life.

Like many a former financial services golden child in recent years the once shiny and new name of Sipps has started to become tarnished.

There have been increasing numbers of complaints about this product heading to the Financial Ombudsman Service and Financial Services Compensation Scheme in recent years.

Many of these complaints are due to the wrapper being used to plough cash into unregulated and non-mainstream investments and the saver not grasping the risks they were taking.

This week the once-shiny name of Sipp continued to be dragged through the mud in a way that attracted the nation’s attention as former England captain Alan Shearer headed to court over his pension wrapper.

Within a day of launching a £9m High Court damages claim arguing he was given “negligent” financial advice, and after grabbing countless headlines, Mr Shearer agreed a settlement.

Mr Shearer, 46, had sued financial adviser Kevin Neal and pension specialist Suffolk Life.

The terms of the settlement, which was reached the day Mr Shearer was set to talk in court about how he felt let down by the Sipp provider and his financial adviser, were confidential.

Lawyers had indicated ahead of the settlement being reached that the case centred on Mr Shearer’s pension being worth around £4m.

Mr Shearer, now a pundit on Match of the Day, said he had lost millions of pounds, branded Mr Neal “careless” and “dishonest” and claimed Suffolk Life breached fiduciary and regulatory duties.

Both Mr Neal and Suffolk Life, based in Ipswich, disputed his allegations. Mr Neal said the claims were “just driven by pure greed and ego”.

Suffolk Life lawyers said Mr Shearer faced “very serious obstacles”.

Because a deal was struck, all we are left with now is more negative headlines about Sipps.

But is it right to bash this product and (should I be saying this) can this wrapper truly be mis-sold or is this an example of why it is incredibly wrong that there is no “buyer beware” regulations in financial services?