Mis-Sold SIPP FAQs

What are the time limits for bringing forward a mis-sold SIPP claim?

The Financial Ombudsman Service (FOS) have what is known as “time-barring” rules in relation to mis-sold SIPPs. These state that, from the point at which you were mis-sold your pension, you have six years to file a claim for compensation, or three years from the moment you first became aware of the mis-selling.

While six years is the standard limit, there a number of exceptions to this rule. If you believe you have been mis-sold your pension, we advise getting in touch right away to ensure you do not become time barred from making a complaint. Even if you are close to this deadline, please get in touch and we will explore every possible avenue to ensure you can pursue your claim.

The company that advised me to transfer my pension no longer exists - Can you still help?

Fortunately, we can still assist you, yes. In fact, our team specialise in this sort of situation. If your financial advisers are no longer trading, we have the option to bring your case forward to the Financial Services Compensation Scheme (FSCS).

The FSCS are able to compensate up to £85,000 of your pension to you, should your claim be successful. We deal with the FSCS regularly and understand the inner workings of these sort of claims. We will ask for some details of your situation, and then begin the process of investigating the claim with the FSCS directly.

How much compensation can you expect from a SIPP claim?

The compensation you may look to receive will be dependent on which regulator we refer your case to. If the FCA regulated financial firm is still trading, we will look to recover compensation via the Financial Ombudsman Service (FOS). Any complaints about acts or omissions by firms on or after the 1^st April 2019 can potentially be awarded up to £350,000.

If the FCA regulated financial firm is no longer trading, we will refer your case to the FSCS. If the firm failed after 1^st April 2019, up to £85,000 could be awarded per eligible person, per firm.

Who are the FCA?

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its primary roles include protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.

As of May 2020, the FCA regulates over 59,000 businesses. They can issue warnings, alerts and fines to firms, restrict or suspect activity, seek criminal prosecution in cases of financial crime, and publish all decisions and detailed information for public use.

Who are the FSCS?

The Financial Services Compensation Scheme (FSCS) is the UK's statutory deposit insurance and investors compensation scheme for customers of FCA authorised financial service firms. The FSCS will compensation consumers if a FCA regulated firm is unable to.

The FSCS enforces a levy on all FCA regulated firms which is paid into an annual compensation pot. The levy for 2021/22 is £833m. It has often been described as a “lifeboat fund” for consumers who deserve compensation after a mis-selling or negligent financial advice.

It is independent of the Government and the financial industry, and was set up under the Financial Services and Markets Act 2000, becoming operational on 1 December 2001. They do not charge individual consumers for using their service.

Who are the FOS?

The Financial Ombudsman Service (FOS) was established in 2001 in order to help settle disputes between consumers and FCA regulated businesses providing financial services, such as banks, building societies, insurance companies, investment firms, financial advisers, and finance companies.

The FOS resolves disputes fairly and impartially, and is completely free of charge. If the FOS finds in your favour, it has the power to order the financial company to put things right, whatever that might be.

Why is regulated financial advice so important?

Consumers getting advice from unregulated advisers is on the increase, with financial scams hitting the headlines more than ever. Unregulated advisers can take advantage of people’s vulnerability, and remaining vigilant is becoming increasingly important.

FCA regulated firms are obliged to follow their strict rules. The FCA demand that the financial advice given is fair, suitable, and appropriate for a client’s needs.

Protection from the FCA and FOS, and compensation from the FSCS, is only provided when you have dealt with a regulated financial company or adviser. By using a regulated financial adviser, you will have the right to complain if you have lost out financially.

What is Phoenixing?

Phoenixing occurs when a company becomes insolvent, and a new company is formed in its place. Directors will often rack up debts, sell off the company’s assets to a newly formed company, often under the same or similar name, and to the same directors. Assets are transferred at below value or for nothing.

Directors are then rid of any debt, with creditors losing out. The old company is placed into liquidation, but as the company as no existing assets, there is nothing to be used to cover the debts.

The process of phoenixing is actually legal, so long as certain rules are followed and behaviour is not misleading or wrongful. However, we come across many financial firms who phoenix in order to avoid the responsibility of paying back creditors and investors fairly.

How can you tell if your adviser is legitimate?

Unfortunately, some financial advisers are tarnishing the whole industry. It is important to look out for illegitimate advisers to ensure you do not fall into any poor financial advice or scams. Legitimate advisers will not cold call, they will not offer time-sensitive deals, and they will not pressure you into transferring out of your defined benefit pension.

Always work with an FCA regulated adviser, get full contact details (not just a mobile number), and do your research before entering into any agreement. In addition to this, if it seems too be good to be true, it probably is.

The types of pensions most commonly mis-sold

While the FCA is working to shut down lots of unregulated pension schemes, many still exist and are being sold to UK investors. The most common type of pension that is being mis-sold is the self-invested personal pension (SIPP). This type of pension is unsuitable for the everyday investor, though they are often sold to inexperienced consumers. If you are told to transfer you pension into a SIPP, please do some research beforehand and thing carefully about your decision.

Other types of pensions that we see mis-sold include Small Self-Administered Schemes (SSAS), and Qualifying Recognised Overseas Pensions Schemes (QROPS). If you have been offered a SIPP, SSAS or QROPS it is likely it is not suitable for you. If you have invested in any of the above, please in get in touch. We can inform you whether you have been mis-sold and help you get your pension back.