There will continue to be a high demand for self-invested personal pensions in the future as the Carey case and Covid-19 struggles fail to dampen the market further, according to the guests on the latest episode of the FTAdviser Podcast.
A High Court judge ruled in the long-awaited Adams v Carey case in May that the provider, which was explicitly acting on an execution-only basis, was not liable for a member’s choice to invest in a high-risk investment.
Many in the Sipp industry were awaiting this judgment with bated breath as it was expected to put many issues to bed and potentially create a precedent going forward.
Appearing on the FTAdviser podcast, Julian Puddy, director at advice firm Opus Business Pensions, said the Sipp market will not be muddied by the Carey case, or the issues it raised, and instead there will continue to be a demand for Sipps way into the future.
My Puddy said: “I think this case is an isolated incident, and highlights that perhaps even more due diligence needs to be carried out on behalf of Sipp providers. They should even look through to companies who are advising clients as part of a second or final check.
“A lot of the major life companies are doing far more due diligence than they ever did before and are now looking through to advice companies.
“My clients are being scrutinised to the nth degree to make sure that we as an advice company are the real deal.”
Stephen McPhillips, technical sales director at provider Dentons, agreed that work has to be done in certain parts of the industry among providers to ensure they are carrying out adequate due diligence.
But he said the Carey case was helpful in showing that there is a clear separation between the Sipp wrapper and what happens within it as this gets muddied at time within the industry or in consumers eyes.
Mr McPhillips said: “People have got this perception that Sipps are all bad.
"But the Sipp wrapper is just a tax wrapper, it is what individual consumers and individual providers allow to happen within it and the amounts and concentrations of non-standard investments.
“We have seen a line of travel in the industry that has seen high volumes of clients going into a particular investment, of which some were toxic.
“You could argue that with hindsight, a provider would not have let 400-500 clients go into one specific investment.”
To listen to the full podcast click play on the video above or listen on Apple Podcasts, Spotify, Stitcher or Acast.
amy.austin@ft.com