The Pension Ombudsman has confirmed its position in relation to the duties of SIPP providers when faced with complex, or risker investments within the SIPP.
Ombudsman Anthony Arter ruled against a complaint lodged by ‘Mr N’, deciding it was not Stadia’s role to undertake the level of due diligence Mr N had suggested.
This follows Mr Arter’s decision in the Berkeley Burke case, where he also ruled it was not the SIPP Provider’s responsibility to conduct extensive investigations into the suitability of the proposed investments.
The Berkeley Burke case was initally looked at by the Financial Ombudsman Service (FOS) who ruled against the SIPP provider for failing to carry out enough due dilligence. It said that the SIPP provider should have revieweed the risky or unsuitable investments and questioned whether to permit the client to place deals for these within the SIPP.
In this case, Mr Artur stated: “The limit of Stadia’s responsibility as administrator is to consider whether or not an investment falls within the list permitted by HMRC. Whilst they can choose not to allow an investment even if it is permitted by HMRC, there is no requirement on them to do so.”
The investment in this particular matter was a non-regulated investment of £144,000 in Australian Carbon Credits and £3,900 in African Land.
From a SIPP Trustee/Administrator’s point of view, it demonstrates the need to carry out basic checks and where approrpiate give warnings sufficient to meet the requirements imposed on them by the regulator and HMRC for such investments at that time.
From an investors point of view, this decision indicates how difficult it is to blame a failed investment on a SIPP Trustee. Given that SIPP is a Self Invested Pension Plan, in effect the investor is making the calls on what to invest in, then the responsibility to get things right is important.
There would, in my view, be a very different outcome if there was any advice on the investments. For example, if an IFA had advised the customer to enter into the investments, then we would look at pursuing a claim against the IFA.
If you are a SIPP provider and want me to review your compliance paperwork, or are an investor/retail customer who needs advice on bring a claim for mis-selling involving SIPPs, Pensions or other investments, then please get in touch.
Source: FT Advisor