The mis-selling of pensions is fast becoming the next big mis-selling scandal to hit UK consumers, following the billions that have been paid out for mis-sold PPI in the past few years.
Claims for mis-sold SIPPs led to total payouts of £105 million in 2016/17, which grew to £405 million in 2017/19 – with affected consumers being awarded compensation payouts of around £30,000 – £50,000.
We have put together the below guide with everything you need to know about SIPPs, how they may have been mis-sold and how you can make a SIPP claim.
What are SIPPs?
SIPPs stands for Self-Invested Personal Pension, and are a financial product designed to provide more freedom regarding your pension investments.
This may seem like a great idea for consumers – giving them more control over where their pension is invested – but in reality, SIPPs were created for more experienced investors to take more risks with investments.
SIPPs should never have been recommended as a viable solution for the general public to manage their pension pot, and as such many people lost a lot of their pension fund due to the poor advice and mis-selling of SIPPs.
Benefits of a SIPP
The SIPP scheme is a personal pension scheme which is approved by the UK government, and can offer as much as 45% tax relief on contributions as well as no capital gains tax or additional income tax to pay in the UK.
SIPPs can also offer a wider range of investment options from a variety of sources. However, just because they offer more choice and tax benefits, it does not mean the investments are suitable.
As there is a wide range of investment options available with a SIPP, your pension can end up being placed in risky and unregulated investments by a financial advisor who’s main aim is to earn commission. This added risk can result in investors losing huge chunks of their pension pot.
How to know if you were mis-sold a SIPP
If you were advised by a financial advisor to place your existing pension into a SIPP then you may have been mis-sold.
SIPPs are typically only suitable for experienced investors who want to manage their pensions and investments. So if you have a SIPP and this was not your intention then it is possible you were giving misleading or inadequate advice, or you were not told of the risks associated with putting your money in a SIPP.
Below we have outlined some common examples where you could have been mis-sold a SIPP:
- You were told transferring to a SIPP would be better than your current personal pension plan
- Your advisor recommended a SIPP, but did not outline the investments to be made within the SIPP
- Your advisor did not give you adequate information regarding the potential risks associated with a SIPP
- Your advisor suggested a SIPP by highlighting the tax benefits rather than any fund management benefits
- When promoting a SIPP, your advisor did not explain that HMRC could change the tax rules governing SIPPs at any time
How to make a SIPP claim
Mis-sold SIPP claims are handled by the FSCS (Financial Services Compensation Scheme), and you can find more information regarding pursuing a SIPP claim here: https://www.fscs.org.uk/what-we-cover/pensions/
However, unlike PPI claims (which were fairly easy to pursue without the help of a claims company), SIPP claims can be quite complex and you should certainly consider enlisting the help of a specialist SIPP claim company.