What is a Self-Invested Personal Pension (SIPP)?

Mis-sold pensions are common cases through the doors of a Financial Litigation department in a community law firm.

Self-invested personal pensions, or SIPPs – simply put – are DIY pensions created for seasoned financial investors looking for more nuanced control over the types of investments their pensions are tied into.

Why do some investors fall foul of mis-sold personal pensions? Figures reported in 2019 revealed that  £197 million had been lost to investment scams in 2018 – a huge number for would-be investors to be collectively conned out of.

We must stress that not all SIPPs are sold maliciously. As with all products, however, dubious sellers give the honest ones a bad name and prey upon goodwill, pressure-selling or naivety of the buyer to close a sale.

Thankfully, there are signs to look out for though when it comes to purveyors of fraudulent financial investment packages.

What warning signs should I look out for?

If any (or all) of the below scenarios occur when dealing with investments, it could be that you are dealing with an investment scam:

Lack of information

Vagueness regarding costs, potential hidden fees and additional charges attached to a transaction. Also be aware of any seller who doesn’t go over the risks of transferring into such a pension, or fails to acknowledge potential risk of an investment being lost entirely.

Cold-callers

Being contacted out of the blue by an investment salesperson having had no prior dealings with them.

High-pressure tactics

Pressure to act quickly, sign up right away or commit to making transfers on the spot because you ‘risk losing out’.

Big promises

Being told that you will grow your investment considerably and receive a large return.

‘Large lump sums’

Sellers who inform you that you can draw large sums of cash out of your pension pot, or insist that you can gain access to it prior to your retirement age.

What can I do if I believe I have been mis-sold?

The first thing to do is remain calm. It may be possible for you to pursue a claim for compensation from an Independent Financial Adviser (IFA) dealing with the investment, or even from the SIPP provider itself.

It would be advisable to seek instruction from a reputable solicitor dealing in Financial Litigation and investment/pension mis-selling. If you do your research, you will find that some solicitors operate on a ‘no-win, no fee’ basis, or will at least review your case for free to see if you have an eligible claim.

Gaining reassurance

In the event of a solicitor not finding any wrongdoing with the investment you are paid into, you will then have the peace of mind that your pension is secure and legitimate.

If you took the trouble to find legal help that offers free case reviews, you will have obtained this reassurance at no additional cost to you.

What if my adviser has ceased trading?

In the event of dealing with a ceased trader or one who is now unable to claim compensation from, the Financial Services Compensation Scheme (FSCS) would assume responsibility for a successful claim, and thus deal with the compensation awarded.

Why would it be advisable to use a solicitor?

Legal complexity

Pension law is very complex. Not only do you need to find the problem, you need to know what you are looking for and where to begin. Even when the problem has been identified, it then needs to be applied to the correct legal and regulatory framework to stand a chance of success.

Better chance of success

Enlisting the help of pension law solicitors will eliminate the possibility of a case being thrown out on technicalities, putting you in the best position to gain back what you are rightly owed.

Too many times, clients turn to a solicitor after failing to make a successful claim themselves due to a lack of legal knowledge, technicalities in the case, or missing key grounds which needed establishing.

Buyer beware

As the old saying goes – “If it’s too good to be true, it probably isn’t.” Never has this statement applied to anything with more relevance than it does with financial and investment products.

Do not allow yourself to be pushed into doing something you don’t want to do, and definitely never make a decision without going away and researching it thoroughly beforehand.