02 April 2007
The Financial Services Authority has warned financial advisers
not to mis-sell Self Invested Personal Pensions (SIPPS) following
reports in the press that people have been persuaded to invest in a
SIPP when they did not really need to.
In a Newsletter to financial advisers, the Financial Services
Authority (FSA) says it is aware that a significant amount of new
SIPPS business has resulted from switches from other pension
arrangements. A number of press articles have suggested that some
of this business might have been driven by high rates of
commission. There have also been suggestions that some consumers
have been advised to join SIPPs who do not need the flexibility and
range of features that SIPPs can offer and who would be better
suited to say a stakeholder pension or personal pension with
sufficient features but which comes at a cheaper cost.
The FSA says that it is already monitoring closely the provision
of advice on SIPPs and it requires firms to treat their customers
fairly. Advice to switch into SIPPs should be suitable - reflecting
the customers needs, priorities and circumstances - and not
influenced by commission payments.
The FSA will fully regulate the sale of SIPPS from 6 April 2007,
and warned that if it finds evidence of people being given poor
advice it may launch a wide enquiry into the industry.
