SIPP firm claims responsibility for investor advice is unfair
One leading SiPP provider has labelled a crack down on the standards of advice investors receive about their pensions as ‘unworkable’ and could lead to higher charges to investors.
The Financial Services Authority investigated a number of small SIPP providers last year and found that investors had received poor advice about charges, and how their pension products actually worked from independent financial advisers.
As a result, the FSA has order more than 60 small SIPP providers to tighten up their customer service and advice to customers.
The SIPP providers claim this is unfair because they do not sell their products direct to investors but via independent financial advisers, who they claim are responsible for the standards of advice.
One company, Suffolk Life has criticised the FSA demand that SIPP providers should take more responsibility for the suitability of advice claiming they are unworkable and will lead to extra costs.
Speaking at the Institute of Financial Planner’s annual conference, Suffolk Life marketing director John Moret said: “Taken to its logical conclusion these recommendations would appear to imply that a SIPP operator is expected to determine whether the advice given by an adviser is suitable.
“This seems to be a significant shift in responsibilities which would potentially put a SIPP operator in a difficult if not impossible position not least because a SIPP operator is rarely in position of all the facts.
“Many advisers would take exception to an operator acting in this way. I doubt that it is workable and it inevitably will lead to extra costs being incurred by the operator.”
The FSA recently published a ‘best advice’ paper for small SIPP providers suggested providers should routinely record and review the type and size of investments recommended by advisers, identify unusually small or large transactions and more unusual investments and request copies of suitability reports.
Moret added that the measures seemed out of line with the expectations of providers of other packaged products.
