The Serious Fraud Office (SFO) has reported a rise in SIPP fraud, which could total £200 million.
The SFO said that investigations into three cases were underway with more being monitored with the past 12 months seeing a number of high profile cases of fraud involving SIPPs.
The £52 million GP Noble pension scheme frauds was one of the largest examples, with 2,000 investors also losing up to £40 million in an insolvent bio-fuel company.
Jane de Lozey, of the SFO, said: “People are being encouraged to disinvest their pensions and put them in highly speculative schemes. Examples of this type of fraud have ramped up in the past 12 months.”
She continued: “We are in regular touch with our anti-fraud partner agencies to share intelligence and get a better picture of the potential threat to investors. The value of these scams in terms of money invested or at risk exceeds £200m.”
Financial experts have warned that investors should be wary of alternative investments marketed by unregulated firms, including those based overseas, which are complex or look ‘too good to be true’.
Property & Bio-fuel fraud
The SFO said that the majority of frauds involved property or bio-fuel investments in SIPPs; however a change may be on the horizon.
The FSA (Financial Services Authority) are due to publish a review of the SIPP market towards the end of the summer, in which they are expected to increase the amount of regulatory capital needed to be held by SIPP providers.
It is also expected that the FSA will link the amount of regulatory capital needed to the number of alternative or esoteric investments held by the SIPP provider. This could lead to SIPP providers being less keen to take in alternative investments and reducing the possibility for fraud.