Mr SIPP AKA John Moret calls for rewrite of SIPP regulation

by | Aug 22, 2022

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Industry veteran John Moret, also known as Mr SIPP, has called on the Treasury to instigate a review and rewrite of SIPP regulation following a number of SIPP provider failures many of which have been triggered by adverse determinations by the Financial Ombudsman (FOS).

Commenting he said: “The SIPP regulatory framework is a mess and not fit for purpose. It was created in haste in 2007 and has never been properly understood or enforced. In addition new pension propositions are being created and labelled SIPPs which is a misnomer and confusing for customers.

It is worrying that FOS appear to be making up the rules as they go along relying heavily on historic FSA and FCA guidance which they are interpreting as good practice at the time. They are also applying a court decision on a SIPP scam to a range of other situations and concluding that this is “fair and reasonable”.

The implications for providers of all types of SIPP, particularly those operating on an execution only basis, are significant and the inconsistencies in determinations reached by FOS are of real concern. For example in a claim against an execution only SIPP provider, which was not upheld, FOS confirmed that as the claimant had signed documents acknowledging that the provider could not be held responsible for the suitability of any investments then the provider could not be held responsible if the investments underperformed or failed. The investments in this case were in the Woodford Patient Capital Trust.


Contrast that with another recent FOS determination upheld against a SIPP provider which involved an execution only client investing in bonds listed on a Danish stockmarket and which the provider deemed to be a standard investment. The investment promoter was regulated as was the stockbroker that executed the transaction. The provider warned the investor that he was undertaking a high risk investment and the investor signed a declaration acknowledging this. Most surprisingly FOS said that the provider should have refused to accept this investment unless the investor took “professional advice from a suitably qualified and authorised adviser”. Whilst that may indeed have been a sensible action for the investor to my knowledge there is no obligation on a provider to insist on this.

It is these and other inconsistencies regarding due diligence requirements that lead me to conclude that it is in everyone’s interests for there to be total clarity around a provider’s responsibilities in accepting investments – particularly on an execution only basis.

Some four years ago I circulated a policy paper to the Treasury, FCA, FOS and others suggesting that it was time to clarify the role and responsibilities of a SIPP operator. Today I repeat that call particularly in the light of the new consumer duty requirements which will impact all non-workplace pension providers along with all advisers large and small.


The guidance I proposed would cover the following:

  1. What is an “acceptable” or “appropriate” investment?
  2. Clarify precisely what is required of a SIPP operator with regard to due diligence of investments – both standard and non-standard – and of introducers.
  3. Confirm the extent to which the requirements in 2 apply where the SIPP was accepted on an execution-only basis and what other requirements, if any, exist in these circumstances.

Whilst this guidance might not help resolve historic claims it would be a useful indicator of what is “fair and reasonable”. It would also provide much needed comfort for providers and advisers against the potential for future claims and would limit the scope for claims management companies to create unjustified consumer expectations and, as a result, increased overhead and administration costs for providers and more regulatory costs for advisers.

In recent months the FCA have come in for considerable criticism for dilatory action on a range of failed investments and scams. Now is the time for action on SIPPs and non-workplace pensions – the market for which continues to grow. Having been involved with SIPPs since their launch in 1990 I hope the Treasury and regulator understand that these suggestions are made with the best interests of all parties involved in mind.”


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