Speaking at the annual AMPs conference in London on Wednesday, John Moret (aka Mr SIPP) said he felt that it was time for SIPPs to be renamed Individual Pension Accounts (IPAs). He said that the brand damage caused by historic SIPP scams meant that most SIPPs were now being set up without the ability to invest more widely in non-standard investments.
He went on to explain that he felt IPA more closely reflected the reality of what was happening now, with the growth of SIPPs fuelled largely by investment platforms and new fintech providers. He proposed that there should still be the option of a “self-select” IPA able to invest in wider range investments; but that this should only be available to HNW and sophisticated investors – and that the FCA should be responsible for certifying that investors met this criterion. He suggested that this approach was much more consistent with the ISA regime and as a result far less confusing for the consumer. He felt that the SIPP label had been tarnished beyond repair by the various scams and legal cases.
He was highly critical of the current regulatory regime for SIPPs which was based on the packaged product model and in his view had never been fit for purpose. He considered that ineffective regulation and monitoring by both FSA and FCA was as much responsible for consumer detriment as the activities of most providers and advisers. He highlighted recent Financial Ombudsman (FOS) decisions and determinations which he claimed were based on a “cut and paste” approach and were driven by the FOS action plan, which aims to dramatically reduce the numbers of complaints, rather than by a reasoned consideration of the facts.
He contrasted the well reasoned arguments advanced by The Pensions Ombudsman (TPO) in reaching their determinations with the poor rational behind many FOS determinations, which relied largely on the blanket application of a single judgment reached in a case involving a scam where Berkeley Burke lost an appeal against a FOS determination in 2018. Moret questioned why there continues to be two ombudsmen – FOS and TPO – able to consider complaints about SIPP operational and investment related issues – with two different criteria for reaching decisions. He suggested the overlap led to arbitrage and meant that most claims management companies (CMCs) favoured referring complaints to FOS where the threshold for success was lower.
On a more positive note, Moret was still bullish about the prospects for the non-workplace pensions market:
“Whilst I do not expect SIPP market growth rates to continue at historic rates of over 20% per annum, I believe the activities in particular of fintech platforms targeting millennials and generation Z investors could certainly see the market increase significantly from its current size, which I estimate to be around 2.8 million investors and c£450bn of assets”.
Moret concluded by expressing concerns over the potential for further scams and frauds as the demand for ESG investments grows, and also suggested that CMCs could well turn their attention to income drawdown investors – particularly those without an adviser – if markets continue to fall and the cost of living crisis grows.
He also called for the FCA to clarify what constitutes an “appropriate” investment and to remove the “regulatory fog” that exists around investment due diligence requirements, not just for SIPPs but for all individual non-workplace pensions.