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Advisers call for ban on unregulated SIPP investments

Meeting
  • 71% of advisers think the FCA should ban unregulated investments in SIPPs
  • 86% say the regulator should ban unregulated pension introducers
  • 50% say the Carey Pensions ruling has made them more cautious about high risk SIPPinvestments
  • But 31% think non-standard assets have an important role to play in SIPPs
  • 46% expect the number of SIPP-related complaints to increase over the next 12 months

A strong majority of advisers have called for a ban on both unregulated investments in SIPPs and unregulated pension introducers, new research reveals.

A CoreData Research survey of 350 UK financial advisers found more than seven in 10 (71%) think the FCA should ban unregulated investments in SIPPs. The survey, conducted in September, also found that nearly nine in 10 (86%) respondents want the regulator to ban unregulated pension introducers.

Advisers serving the mass market feel particularly strongly about these issues — 77% think unregulated investments should be banned and 94% call for a ban on unregulated introducers.

The findings indicate a hardening of views about high-risk SIPP investments – CoreData’s 2020 study showed 40% of advisers thought SIPP providers should not be allowed to hold non-standard assets.

Meanwhile, half (50%) of advisers say the April 2021 ruling against Carey Pensions, now known a Options, has made them more cautious about non-standard/high risk investments in SIPPs. In the ruling, the Court of Appeal sided with claimant Russell Adams who accused Carey Pensions of using an unregulated introducer to facilitate investments in storage pods.

Amid such caution, the study found an overwhelming majority of advisers want the regulator to provide clarity over what investments are suitable. More than eight in 10 (83%) think the regulator should introduce a list of prohibited SIPP investments – up from 76% in CoreData’s 2020 study.

However, despite the unease over high risk investments, nearly a third (31%) of advisers agree non-standard assets have an important role to play in SIPPs, while 41% are neutral and 28% disagree. And two thirds (65%) think the ruling against Carey Pensions will result in less choice in the SIPP market.

“While advisers recognize that not all non-standard assets are exotic and toxic, they are worried about the risks posed by unregulated investments in SIPPs and want the regulator to take action,” said Andrew Inwood, founder and principal of CoreData. “Providing clarity on the precise role of SIPP providers and advisers when it comes to high risk investments is essential.”

The study also shows the important role advisers assign themselves when it comes to reducing consumer harm. Nearly six in 10 (57%) think consumers should not be able to purchase SIPPs without taking advice. This increases to more than two-thirds (68%) of mass market advisers.

Looking ahead, nearly half of advisers (46%) think the number of SIPP-related complaints will increase over the next 12 months. And eight in 10 (79%) think there will be increased regulatory scrutiny of SIPPs going forward, while six in 10 (60%) expect the market to consolidate over the next year.

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