In an interesting analysis of Sipp trustee liability and potential claims for lack of due diligence, Money and Me looks at the story so far
Whether claiming compensation (or complaining) direct, or via a specialist company. You may wish to consider the following information in relation to the prospect of achieving a successful outcome:
The FSA/FCA have conducted a number of reviews of the SIPP trustee sector.
· In 2009 a report by the Financial Services Authority (FSA) concluded SIPP trustees did not pose a significant risk. · Then in 2012 the FSA delivered a damming review of SIPP trustees which said: ‘Poor compliance with regulatory requirements, particularly in the area of risk planning and mitigation, has significantly increased the risk posed by Sipp operators.’
· However, again in 2012 a SIPP trustee won a ruling on a £300,000 claim that it had failed to conduct due diligence on the investment.
· On 21st July 2014 the Financial Conduct Authority (FCA) wrote to SIPP trustees after it found ‘unacceptable and significant failings in firms’ due diligence’ on non-standard (alternative) investments (such as Storage Pods, Hotel Rooms, Land, Car Parks, etc). This was the conclusion of the regulator’s third thematic review into SIPP trustees.
· Then, in July 2014 the Financial Ombudsmen Service (FOS) ruled in favour of a Client against a SIPP trustee. However, since the original decision the SIPP trustee has been attempting to overturn the award.
Some argue SIPP trustees have ‘no proven responsibility for due diligence’ and in general there is much uncertainty about who takes responsibility when an investment held within a SIPP goes wrong.
We find it ironic, scandalous even, that (in their ongoing communications) SIPP trustees frequently advise Clients ‘to seek legal/IFA advice’ – yet the same companies didn’t insist, nor check financial/legal advice was provided before allowing their Clients to invest in such high risk, often unsuitable alternative products.
However, SIPP trust deeds state clearly that the SIPP trustee does not give advice and that it will not be responsible for the suitability of an investment. In addition, such deeds tend to contain a clause designed to relieve the SIPP trustee/provider of any liability for damages caused by poor investments, no matter how careless, incompetent or negligent a SIPP trustee is in its duties. In effect, this means that a Client can have no claim against a SIPP trustee except where the actions of the company amount to deliberate bad faith.
Whilst we are aware of FOS decisions that have gone in Clients’ favour, we are also acutely aware that the Pension Ombudsman regularly decides in favour of the SIPP trustee/provider on the basis that their actions do not amount to deliberate bad faith.
It seems proving deliberate bad faith will be key in this complex argument.
Feel like you have received negligent advice? Choose Money & Me Claims to handle your mis-sold SIPP claim.