FT Adviser (15/05/2019) – The hike in self-invested personal pension complaints to the Financial Ombudsman Service is expected to continue as misadvised clients and claims management companies bring forward cases.

The number of Sipp complaints referred to the Fos increased 86 per cent to hit 3,811 in 2018/19, up from 2,051 in 2017/18, according to the ombudsman’s annual report published today (May 15).

Sipps also topped the list of the most complained about products against IFAs, with the ombudsman resolving 232 complaints with an uphold rate of 62 per cent.

The complaints body stated two thirds of Sipp complaints are now brought to the Fos by a third party, such as claim managers and law firms, up from a third in the previous year.

Although these third parties are generally acting in provider due diligence cases, not cases against advisers, according to the Fos.

Advisers and Sipp providers have told FTAdviser they do not expect this trend to slow down anytime soon with CMCs being particularly active in filing Sipp complaints to the Fos.

Alan Chan, director at IFS Wealth & Pensions, said he suspects there are still more clients who have been misadvised to take out a Sipp by their adviser and are poised to make a complaint.

He said: “Although most advisers have tightened up in this area of advice and do not recommend Sipps unless the client is, for example, sophisticated and has a real need for the additional features, I imagine there are still a number of clients who were mis-advised to take out a Sipp.

“It’s only a matter of time before they too make a complaint.”

The Fos does not collect data on how many of the claims made against Sipp providers involved advised clients. Where an adviser has gone out of business their clients may choose to claim with the Fos, which has a £350,000 claims limit, as opposed to the Financial Services Compensation Scheme, which can only pay out £85,000.

However, Mr Chan said this information would not change the fact that “Sipps are high risk products and should not be recommended to the average Mr Joe Bloggs”.

Mr Chan said: “I would imagine a fairly high proportion of past complaints would be against the adviser as typically they did not advise on the underlying assets but just the product itself, ie, the Sipp, which we know cannot be deemed suitable advice as confirmed by the FCA.

“But then there are also a large number of complaints against the Sipp provider themselves for allowing them to invest in non-standard, toxic investments as part of the permitted range of assets.”

Full article link: https://www.ftadviser.com/sipp/2019/05/15/sipp-complaints-will-keep-coming-industry-says/