Seven in ten advisers believe the responsibility for ensuring that self-invested personal pension investments are suitable lies with them rather than providers or the client.
A study from CoreData Research, published today (September 26), found out of 1,000 advisers fewer than a quarter (22 per cent) thought providers were responsible for ensuring investments within Sipps are suitable and only 8 per cent thought investors should bear responsibility.
Furthermore nearly two thirds thought clients should not be able to open a Sipp without taking advice first.
But half of advisers thought providers could play a role in protecting clients by not allowing non-standard investments.
Eight in 10 also called for a list of prohibited Sipp investments, while 59 per cent said recent Sipp court cases have made them more cautious about unregulated investments in Sipps.
Advisers said they expect to see the number of Sipp complaints increase in the next year with half saying this type of pension product should only be used by experienced investors.
Craig Phillips, head of international at CoreData Research, said: “The study shows that while advisers are approaching Sipps with a sense of caution, they assign themselves a high degree of responsibility when it comes to protecting clients from bad outcomes and ensuring Sipp investments are suitable.”
Martin Tilley, pensions director at Hurley Partners, said he does not agree that advice should be a requirement when opening a Sipp.
Mr Tilley said: "I would agree that with any advised Sipp, the primary responsibility for the assets within it lies with the adviser. However, many Sipps are not advised and are set up directly with the Sipp company.
"There is still a market for non standard assets Sipps albeit for the high net worth or sophisticated client only. Don’t forget, in some instances a commercial property can be a non standard asset so to ban them altogether would be a backward step.
"I therefore do not agree that advice should be a prerequisite to opening a Sipp, and particularly those that offer regulated investments only."
Mr Tilley thinks the client should hold some level of responsibility for their own investments.
He said: "What we need to consider is that there are many very good regulated advisers out there offering advice, there are also many online educational and informative bodies and websites available able to give guidance.
"If an individual shuns this advice and makes an investment, with all the high profile warnings of scams etc, then they do need to take on the responsibility of doing so themselves.
"Similarly Sipp providers should not be accepting anything that is inappropriate for pensions schemes now."
Victor Sacks, independent financial adviser at VS Associates, believes it is down to the provider to ensure the investment being provided is suitable.
Mr Sacks said: “Sipps are designed for the sophisticated investor, who's either going to buy individual stocks and shares or buy approved land or property.
“Providers should be in charge of what they are selling and not work on 'Caveat Emptor' where the onus is completely on the buyer.”
Advisers believe the Sipp industry has been unfairly tarnished by a small number of problem cases and although they are largely confident the Sipp product will survive these testing times, they do expect the market as a whole to shrink.
Three-quarters think the number of Sipp providers will decrease over the next few years, compared with 4 per cent who predict an increase.
Only last week (September 18), Sipp provider Berkeley Burke went into administration and its client book was bought by Hartley Pensions.
This was after it was unable to cover the financial costs of defending claims made against it in respect of the firm's alleged due diligence failings when accepting high risk investments.
Hartley has snapped up a number of failing Sipp firms' client books in recent years.
Last month it bought the £130m client book of GPC Sipp, which entered into administration earlier this year after it was embroiled in hundreds of customer claims, and in October 2018 it bought Greyfriars Asset Management's Sipp business for £820,000 after the firm entered insolvency.
amy.austin@ft.com
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