A strong majority of advisers have called for a ban on both unregulated investments in SIPPs and unregulated pension introducers, new research reveals.
A CoreData Research survey of 350 UK financial advisers found more than seven in 10 (71 per cent) think the FCA should ban unregulated investments in SIPPs. The survey, conducted in September, also found that nearly nine in 10 (86 per cent) respondents want the regulator to ban unregulated pension introducers.
Advisers serving the mass market feel particularly strongly about these issues — 77 per cent think unregulated investments should be banned and 94 per cent call for a ban on unregulated introducers.
The findings indicate a hardening of views about high-risk SIPP investments – CoreData’s 2020 study showed 40 per cent of advisers thought SIPP providers should not be allowed to hold non-standard assets.
Meanwhile, half (50 per cent) of advisers say the April 2021 ruling against Carey Pensions, now known as Options, has made them more cautious about non-standard/high risk investments in SIPPs. In the ruling, the Court of Appeal sided with claimant Russell Adams who accused Carey Pensions of using an unregulated introducer to facilitate investments in storage pods.
Amid such caution, the study found an overwhelming majority of advisers want the regulator to provide clarity over what investments are suitable. More than eight in 10 (83 per cent) think the regulator should introduce a list of prohibited SIPP investments – up from 76 per cent in CoreData’s 2020 study.
However, despite the unease over high risk investments, nearly a third (31 per cent) of advisers agree non-standard assets have an important role to play in SIPPs, while 41 per cent are neutral and 28 per cent disagree. And two thirds (65 per cent) think the ruling against Carey Pensions will result in less choice in the SIPP market.
“While advisers recognise that not all non-standard assets are exotic and toxic, they are worried about the risks posed by unregulated investments in SIPPs and want the regulator to take action,” says Andrew Inwood, founder and principal of CoreData. “Providing clarity on the precise role of SIPP providers and advisers when it comes to high risk investments is essential.”
The study also shows the important role advisers assign themselves when it comes to reducing consumer harm. Nearly six in 10 (57 per cent) think consumers should not be able to purchase SIPPs without taking advice. This increases to more than two-thirds (68 per cent) of mass market advisers.
Looking ahead, nearly half of advisers (46 per cent) think the number of SIPP-related complaints will increase over the next 12 months. And eight in 10 (79 per cent) think there will be increased regulatory scrutiny of SIPPs going forward, while six in 10 (60 per cent) expect the market to consolidate over the next year.