Fos decision could force swift Sipp provider settlements

But according to Martin Tilley, director of technical services at Dentons, not all unregulated introducers are bad.

He told FTAdviser: “We receive business introduced to us sometimes through accountants, or surveyors who have clients who want to buy a commercial property.

“From that perspective, I wouldn't say that we don't accept business from unregulated intermediaries, what I would say is that we don't accept any business from intermediaries proposing a non-standard asset.”

But Sipp provider AJ Bell has a different view.

Senior analyst Tom Selby said: “We have our main adviser-focused Sipp, which was set up on day one on the basis that an [Financial Conduct Authority] FCA-regulated, UK-based adviser has the control of a Sipp of an individual customer.

“We also have a direct-to-consumer SIPP (through AJ Bell Youinvest) that operates on an individual customer basis.

“Unregulated introducers don’t fit into either of those propositions.”

According to Craig Harrison, managing director at Creative Wealth Management, if Sipp providers have knowingly taken business from unregulated introducers and put client’s money into (often) illiquid and unregulated vehicles then "they are on a sticky wicket."

The FCA revealed last week that it has referred two Sipp operators to its enforcement and market oversight division, a procedure which is triggered when the regulator finds serious failings.

The watchdog also has an ongoing skilled person review into a Sipp provider relating to the due diligence performed when accepting a non-standard investment, she added.

In a letter to Frank Field, the chairman of the Work and Pensions select committee, Megan Butler, the FCA’s director of investment, wholesale and specialist supervision, also revealed that the regulator has 33 open investigations into advisers the watchdog suspects have given poor advice to transfer into a Sipp.

Ms Butler also revealed that the total of non-standard investments held by Sipp providers reached almost £6bn as of September 2017.

This figure represents approximately 2 per cent of the total of £300bn of assets under management with the largest contract-based Sipp providers.