How Do I Get Out Of Impossible SIPP Situation?

maia_evo

I am so hoping someone can give some insight.

As an overview of my position, I used my pension to purchase a fraction of an overseas hotel room via a SIPP (please don't bombard me with "how could you be so stupid" - I am paying for my naivety!).

The FSCS have agreed that this was mis-sold to me and have paid some compensation, with the balance of the compensation being due when the exact losses can be finalised. This they say can only be done when the "investment" is sold.

Herein lies one of many problems.

The contract states that should you wish to sell, this must be offered (via the original seller) to others who own a fractional share. The other owners have 6 months to decided if they want to purchase or not.

I am thinking my best bet is to make it as attractive as possible for someone to buy by offering it a ridiculously low price (one that as they would be paying the SIPP provider fees already, would actually make them a small return!)

Another thought I had (as a friend is in the same position) was to buy each others share for £1 (but then we are still faced with the hefty SIPP provider fees for eternity!)

Does anyone know of how to get out of a mess like this please?

IanSt

Sorry I don't have the legal knowledge that could help you with your problem, but I would just caution you that I'm pretty sure that the price you do get will be analysed and enquiries made if it looks too low.

I thought that with schemes like this you had to go back to the provider of the scheme itself to see what they would offer rather than you tell them what you would sell it for. Is that not right for your case?

maia_evo

Thank you for your post.

I would not do anything regarding selling price without first checking it out the FSCS but it does seem to be a good olde mess in which the inevitable seems to be to lose the full amount paid in £'s and continue to pay the fees I signed up to forever and beyond.

The two options I have been told I have are:
a) to offer for sale to the other fractional owners via the company, after the 6 months they "periodically" offer the property for sale to their contacts for a 15% fee

b) after the 6 months, sell privately via an estate agent. Not exactly easy as you are not buying a property but a share of a company that owns a hotel room!

In the words of Cher "if I could turn back time"!

Malthusian

In other cases I have seen where someone was mis-sold unregulated investments, the Financial Ombudsman Service ruled that the misselling adviser had to compensate the investor on the basis that the investments were worth nothing (which they almost certainly are), or buy the investments off the investor (or their SIPP) and compensate them for the difference. Of course the adviser never did so.

When that adviser liquidated the company the FSCS had to pay that claim instead.

There seems to be some inconsistency in the regulatory system where investors have to go to the FSCS instead of the FOS because the adviser has already been liquidated, and the FSCS, instead of treating the investments as nil value, are telling people they have to wait until the investments are sold. Which will be a very long time, especially if the dud investment hasn't actually collapsed yet.

My suggestion is:

1) Contact the original seller in writing and say you want to sell your investment

2) If they actually give you some money, then great - claim the difference off the FSCS (try not to think about where the money came from)

3) If (more likely) you receive no response, or nothing but excuses, wait at least a year, then say to the FSCS "I've been trying to sell this investment for a year, and have had no response - so it is clearly worthless" and see what they say.

I wouldn't go private. Even if you could find an estate agent that would touch it, what if the buyer sued you for selling them a dud investment? Why take money off others when you're due compensation from the FSCS?

There is nothing you can do about the SIPP fees. The SIPP still has to adminster the unregulated investments and this costs money. Is there cash in the SIPP or are you having to pay fees in out of your own pocket?

maia_evo

Thank you so much for your response Malthusain which is of great value to me in terms of understanding where I stand.

I will set out to do what you have suggested.

There is still a cash balance on the SIPP so I am not paying the fees directly out of own pocket each year.