SIPP pension mis-sold?

bmm78

Norfolk_Norris wrote: »

Hiya - quick update.

17/12/13 was the 8th week since the original complaint was made; no official response has been received (aside the odd phone call to ask me to withdraw the complaint and chase IFA#1 through the courts.

I guess now I tell the FOS I have had no response?

Many thanks and Happy Christmas!

On receipt of a complaint, a regulated firm is required to issue prompt written acknowledgement that it is dealing with it. This is irrespective of whether they consider the complaint justified or not.

If they have reasonable grounds that another firm may be responsible for the matter, they may forward the complaint onto them. However, they must do this promptly, and inform you that they have done this and provide contact details for the other firm.

(I think we've established in the thread that the firm you have complained to is the one who carries the responsibility, but I've included reference to the Complaint forwarding rules so that you're aware of them)

By the 8 week point the firm is required to either send you their final response letter, or write to you explaining why they have been unable to do so. Either way, they have to provide details of your right to refer to the Ombudsman.

From the last post, none of this has happened. I think it's the time to speak to the Ombudsman and take it from there. You're probably due modest compensation (around £200) for them failing to deal with the complaint properly in its own right, regardless of what the eventual outcome is.

atush

I am finding this thread fascinating.

Didn't see it in Oct as I was in the land of wasting money (ie las Vegas) followed by the land of spending money (Beachside FL). Not very MSE lol.

Has anyone had the idea that I have (that good/bad IFA) are aligned in this scam and have done it before? After all, 'good; IFA alledged he had had prior complaints about 'bad' yet still acted for him?

Wouldn't the mere act of soliciting business in order to pay off a previous unrelated debt be enough to remove whatever certification 'Bad' has?

Was the 'debt' engineered by IFA (bad) no1 in order to force a sale?

Norfolk_Norris

Hi everyone.

Here's something I found of immense interest.

The pension admin company used for this transaction (not the advisor company) had stated in the financial publication FT Advisor the following, in relation to the pension fund:

We initially approved this investment but our ongoing due diligence showed that it wasn’t what we thought it was. We had a number of clients who had invested and they had some difficulties.
“One client just changed his mind and had difficulty in getting money returned to him, so the administration and the operations did not work as we expected it to and we did not feel comfortable with this firm from a duty of care perspective.”

It goes on to say:

The "Pension admin Company" confirmed to FTAdviser that it had this investment on its Sipp, but said that it had later pulled it due to issues that arose during ongoing due diligence.

I emailed the pension admin company to ask when exactly, was the fund 'pulled' due to the above, and was told "we stopped accepting new business in March 2012."

Now here is my problem... The company which ran the pension scheme (Sustainable Agro Energy) has since been placed into administration and is under investigation by the Serious Fraud Office - the date they were place into administration? March 2012.

Call me a cynic, but saying a fund was pulled because of 'on-going due diligence' and because 'an investor had problems getting his money back', when in reality it appears to have not really been "pulled", more "made unavailable due to the provider being place in to administration".

My question is; had there been this "on-going due diligence" and other client issues, why did the company not warn all the current investors to get the hell out of the fund?

Was someone paying lip service to the FT Advisor?

Was there really any "on going due diligince"?

Was there really this one client who had problems getting his money back?

Should the fund have been pulled WAY before it was "pulled"?

Answers on a postcard...

Aegis

Pension companies without an investment arm really aren't responsible for the ongoing monitoring of investments held within their structures. They specialise in pension administration and levy flat fees for that work - those fees would be much higher if they also had to review every single investment held by their clients every year or so, and even then they likely wouldn't have the expertise to comment on the investments or the relationship with the client to recommend disposal.

All SIPP providers are really required to do is assess 1) whether the investment is permitted under HMRC regulations and 2) whether it is non-mainstream and therefore subject to higher capital adequacy requirements. Beyond that, the decision as to whether to invest is the clients, usually advised by a regulated individual. The adviser is responsible for the suitability assessment of the recommended investment, not the SIPP provider.

I'm cynical, but I imagine the "ongoing due diligence" was likely a reaction to a client telling them that the fund had become illiquid.

Norfolk_Norris

Aegis wrote: »

Pension companies without an investment arm really aren't responsible for the ongoing monitoring of investments held within their structures. They specialise in pension administration and levy flat fees for that work - those fees would be much higher if they also had to review every single investment held by their clients every year or so, and even then they likely wouldn't have the expertise to comment on the investments or the relationship with the client to recommend disposal.

All SIPP providers are really required to do is assess 1) whether the investment is permitted under HMRC regulations and 2) whether it is non-mainstream and therefore subject to higher capital adequacy requirements. Beyond that, the decision as to whether to invest is the clients, usually advised by a regulated individual. The adviser is responsible for the suitability assessment of the recommended investment, not the SIPP provider.

I'm cynical, but I imagine the "ongoing due diligence" was likely a reaction to a client telling them that the fund had become illiquid.

Thanks for the response!

Not sure why the pension company would therefore feel the need to comment that due to their checks, they decided to pull the product; this contradicts what you say, the article making it sound like they do actively monitor the investments they offer.

Surely if they 'offer' the product they have a duty of care to clients they know hold the investment via them, to advise if they feel it is not what it seems?

I'm kind of lost as to what the role of the pension company is. They take an annual feel from my SIPP current account, to "manage" the fund. They claim to carry our checks and even claim to withdraw products if they feel it does not do what it says on the tin...

The article suggests to me that they want to be seen as being aware there were problems, before the pension fund was put into administration, because they were consciencious and caring, yet what actually happened is that the fund folded, only then did they stop accepting funds.

If they are not legally required to monitor the investments they offer, why would they even bother commenting in such a way?

A car dealer sells all the same make and model of car. He sells 10. 1 owner comes back and says the brakes failed and this appears to be a design fault. Does the dealer then contact the other 9 buyers? Or wait for all 9 buyers to die in crashes, THEN say "we decided to stop selling this make and model becuase our research showed the brakes failed."

Anways, I'm waiting for their response to their comments in FT Advisor, so will update if and when they respond.

Thanks
Noz

bigadaj

Your car dealer analogy is interesting and probably apt.

A fundamental design problem with a car would be the manufacturers fault, not the dealer.

Similarly the SIPP provider just does a general check of the suitability of that investment in terms of regulationary review, ie the type of investment is acceptable, whether that is a good investment is then left to the adviser, which in a SIPP is normally DIY but in your case would have been handled by the ifa I assume.

Aegis point was that they are also required to do ongoing reviews, and if they determine that the particular product isn't acceptable anymore, presumably due to either changes in that particular product or a change in regulatory guidance, they would withdraw from providing it.

Norfolk_Norris

bigadaj wrote: »

... they are also required to do ongoing reviews, and if they determine that the particular product isn't acceptable anymore, presumably due to either changes in that particular product or a change in regulatory guidance, they would withdraw from providing it.

Withdrawn because?...not so much a change in the product or regulatory guidance, according to the article:

********** also confirmed to FTAdviser that it had this investment on its Sipp, but said that it had later pulled it due to issues that arose during ongoing due diligence.

This is an obvious lie; it was pulled only when when the fund folded.

********* head of sales at **********, said: “We initially approved this investment but our ongoing due diligence showed that it wasn’t what we thought it was. We had a number of clients who had invested and they had some difficulties.

So, they admit they had on-going checks which uncovered anomalies and investors having problems withdrawing funds... alarm bells?

“One client just changed his mind and had difficulty in getting money returned to him, so the administration and the operations did not work as we expected it to and we did not feel comfortable with this firm from a duty of care perspective.”

Iceberg, right ahead?!

And on discovering this, why did they did not feel it necessary to warn either the investors or their IFA's? Instead, bizarrlely keeping this information to themselves?

I mean, is it just me, or...? :wall:

atush

any word from the ombudsman?

Norfolk_Norris

atush wrote: »

any word from the ombudsman?

Not yet - I only sent the stuff last week due to waiting for a bit more paperwork from the SIPP provider, which suppored the case.

Aegis

Norfolk_Norris wrote: »

Thanks for the response!

Not sure why the pension company would therefore feel the need to comment that due to their checks, they decided to pull the product; this contradicts what you say, the article making it sound like they do actively monitor the investments they offer.

Largely public relations, I imagine. There has been considerable outcry recently about some providers offering less restrictive access to non-mainstream products, so many SIPP companies are scrambling to appear as though they do more diligence than they are required to do.

Bear in mind that SIPPs in their truest sense are self invested options - it should be the client ultimately making the decision about where to invest, with the provider only offering a framework which allows access to permitted investments. Most SIPPs are operated by advisers on behalf of their clients, therefore the responsibility for sourcing and monitoring the investments should fall there more often than not.

Unless the SIPP provider also has an investment management arm or a research facility, they should probably spend most of their time running the pension and should avoid second-guessing the investment approach.

Surely if they 'offer' the product they have a duty of care to clients they know hold the investment via them, to advise if they feel it is not what it seems?

No more of a duty of care than any execution-only facilitators of purchases on someone else's behalf. Market makers of investments are another example of someone involved in an investment contract who would have no responsibility whatsoever for the suitability of that investment for the purchaser.

If the SIPP administrator became aware of problems with investments held on their platform, they should certainly report that to the IFA/client as soon as possible, but they shouldn't be required to actively look for such problems, as that would lead to a huge increase in annual fees for a duplication of service (the adviser is already supposed to do this for the client, after all).

I'm kind of lost as to what the role of the pension company is. They take an annual feel from my SIPP current account, to "manage" the fund. They claim to carry our checks and even claim to withdraw products if they feel it does not do what it says on the tin...

The SIPP company are ultimately just the administrators of your pension assets. Their responsibility is to ensure that they hold accurate valuations of your portfolios and that you comply with HMRC regulations. They will reclaim basic rate tax on your behalf and report annually on contributions and payments to HMRC. They facilitate purchases and disposals. When you retire they provide the funds for either income drawdown or annuity purchase. Mostly that's it.

The article suggests to me that they want to be seen as being aware there were problems, before the pension fund was put into administration, because they were consciencious and caring, yet what actually happened is that the fund folded, only then did they stop accepting funds.

If they are not legally required to monitor the investments they offer, why would they even bother commenting in such a way?

No idea, it strikes me as counter productive.

A car dealer sells all the same make and model of car. He sells 10. 1 owner comes back and says the brakes failed and this appears to be a design fault. Does the dealer then contact the other 9 buyers? Or wait for all 9 buyers to die in crashes, THEN say "we decided to stop selling this make and model becuase our research showed the brakes failed."

I think the analogy is flawed because you are putting the SIPP administrator into the wrong role. They are a facilitator and administrator rather than the actual platform used to deal. Most SIPPs would be more akin to the owner of the lot on which the car dealership is built: they provide the structure needed to make the rest of the operation work, but are a step removed from the actual business of buying and selling. The analogy fails slightly because the SIPP provider need to instruct the movement of your cash from one place to another, but I still think it's more accurate this way.