SIPP providers are breaking the rules, warns FSA

Many SIPP providers are failing to perform, to regulatory standards and are not treating their customers fairly, says the Financial Services Authority.

The FSA has told about 60 smaller SIPP providers to clean up their act - with the main problem that the providers see financial advisors as having responsibility for the client, not the SIPP providing firm.

The FSA has written to all the firms, requesting they review their business processes and warned monitoring is ongoing and regulatory action will follow if SIPPs firms continue to flout the rules.

The FSA investigation showed several problems:

• A few SIPP providers do not check advisers who introduce clients are FSA authorised
• Many firms do not meet regulatory standards over systems and controls, training and competence regime, accuracy of illustrations and telling customers of charges.

The FSA review looked at about 60 small SIPP providers at the end of last year.

The review said: “Of particular concern were firms whose systems and controls were weak and inadequate to the extent that they had not identified obvious potential instances of poor advice and/or financial crime.

“We may take enforcement action against SIPP operators who do not safeguard their customers’ interests in this respect.”

Several SIPP firms were accused of not openly disclosing that some interest paid on client bank accounts was retained. The FSA has told firms to review their literature for clients to ensure annuities and income drawdown options are given equal prominence.

Besides the problems with small SIPP providers, a debate continues about whether a SIPP is the right pension product for people with UK pension rights living permanently overseas.

Many advisors argue that a QROPS - qualifying recognised overseas pension scheme - has more advantages than a SIPP for expatriates as the product is more tax-efficient, less sensitive to currency fluctuation and does away with the need to buy an annuity.

A QROPS also has all the advantages of a UK SIPP - for instance the ability to purchase commercial property in the UK and abroad.

Whatever your financial goals or aims, seeking professional highly regulated advice as early as possible from Qrops Adviser, is the first step in securing the best possible life in retirement. Contact us via the contact Qrops Adviser page, call us direct on 0032 (0)2 400 0087 or email us at info@qropsadviser.com.