The number of complaints received by the Financial Ombudsman Service (FOS) in relation to Self-Invested Personal Pensions (SIPPs) has leapt by nearly 50% over the past year.
According to figures published in the Sunday Times, the number of complaints received by the Ombudsman, up to 31st March 2014, relating to SIPPs, has risen from 697 to 1,036.
The figures show that 75% of complaints were about unregulated or unsuitable investments. The Ombudsman upheld 63% of the complaints made; a similar number to last year.The Financial Conduct Authority (FCA) as well as its predecessor, the Financial Services Authority (FSA), has been warning for some time about unsuitable investments being held within a SIPP. Examples include unregulated investments into overseas property, commodities, forestry, land and even bamboo.
There have also been warnings about unsuitable transfers, where unscrupulous advisers have recommended a transfer into a SIPP, often to make a high risk investment.
Speaking to the Sunday Times a spokesperson for FOS, said: “In almost two thirds of complaints, we are finding that the business has done something wrong and we are telling it to put things right for the customer. SIPPs can offer a greater return than an ordinary pension. However, this comes with a greater risk of losing your cash.” (Source: Citywire)
Over a million SIPPs
Responding to the report, advisers and SIPP experts were quick to point out that there are currently over a million SIPPs in existence, making the number of complaints relatively small.
Investors also need to remember that it is generally the investments selected or indeed the advice to transfer a previous pension, which is often deemed inappropriate.
Spotting an investment scam
Financial scams are getting more sophisticated, catching out even experienced investors. So, how do you spot (and avoid!) a financial scam?
Here’s 6 quick and easy ways:
1. Don’t reply to unsolicited texts
2. Only use regulated advisers
3. “No loopholes” to the under 55’s rule
4. Avoid risk and unregulated investments
5. Don’t be tempted by cash bonuses
6. Don’t be rushed