An exclusive SIPPs Special Report in the latest edition of Financial Planning Today magazine looks at the mounting challenges facing providers, the views on the issues involved and what they plan to do (click here to read Full Version of this Special Report from Financial Planning Today magazine).
In October the sector saw Greyfriars, a smaller SIPP and DFM provider, go into administration just a few weeks after Carey Pensions, facing a serious litigation case, decided its future was better off with rival STM, owner of SIPP firms London & Colonial and Hornbuckle.
While STM has taken over Carey’s book of business, the financial implications of the court case against Carey have been ring-fenced. The Carey ‘Adams’ case revolves around whether a client should have been allowed to invest in unregulated investments and is due to be heard in the near future. It could pave the way for similar claims depending on the outcome.
In contrast to all this negativity, many SIPP providers are expanding and seeing buoyant business. Others say the concerns over legal action have been overdone and affect only a minority.
It’s worth bearing mind the huge size of the SIPP sector these days. With an estimated £300bn invested and some 1.5m-2m investors SIPPs have never been more popular or widely used. They are no longer a boutique section of the pensions sector. They are mainstream.
There’s no doubt, however, that these are nervous times for some SIPP providers with fears that the PPI industry is turning its attention to SIPPs as the PPI deadline looms.
The key issue for the SIPPs sector is whether investments added to a SIPP wrapper, perhaps as execution-only transactions originally, leave SIPP providers with any legal or fiduciary responsibility.
Is a SIPP simply a wrapper or shell to hold a multitude of investments or is it a platform where SIPP providers should take at least some ‘ownership’ for the investments placed inside the wrapper, even if those investments were recommended by an external adviser?
This will be a matter for the courts to resolve but it will be pivotal to the future of the SIPP sector. Too many adverse judgments may force some providers to re-evaluate their books and think carefully about their futures. Several leading and larger SIPP providers believe that the future for SIPPs is still a healthy one as long as toxic investments are kept at arm’s length…
• Read the rest of this Special Report exclusively in the latest issue of Financial Planning Today Magazine.
Click the cover below or here.
