The Financial Services Compensation Scheme (FSCS) has received increasing numbers of claims against Independent Financial Advisers (IFAs) that are no longer trading.
These claims have been in relation to advice these firms have given to transfer funds from existing pension schemes to Self-Invested Personal Pensions (SIPPs). In many cases the SIPP fund was then invested in non-standard asset classes, many of which have become illiquid.
FSCS’s experience of these claims is consistent with warnings published by the Financial Conduct Authority (FCA) in relation to SIPPs, including the FCA’s alert that was published in April 2014.
FSCS has been investigating the SIPP claims it has received to establish if these failed IFAs are liable. We expect to be in a position to start processing claims in September.
As a result of our investigations into SIPP claims, the following firms have now been declared in default by FSCS:
- TailorMade Independent Limited
- 1 Stop Financial Services
- Kynaston-Carnoustie Financial Consultancy Limited
- Crawford Scott Limited
FSCS expects to see further similar failures going forward.
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We will aim to issue decisions on claims relating to these firms within six months of receipt of the claim or the default of the IFA firm, whichever is later.
In order to establish whether a claimant is eligible for compensation, we will consider the advice given by the advising firm. Determining losses suffered by investors is likely to be complex, in particular where the claims involve both pensions and investment advice, and where some of the assets are difficult to value.
To pay compensation, FSCS will need to be satisfied that the firm in default can be held legally liable for the losses suffered by the claimant, as opposed to, for example, some other party such as another firm involved in the transaction or a party that caused an investment to fail.
We may consider making interim payments of compensation where we are not yet able to account for all elements of a claimant’s loss. If you have received advice to transfer your pension to a SIPP by an authorised firm that is no longer trading, and have not yet made a claim to FSCS, please contact the FSCS Initial Contact Team on freephone 0800 678 1100 or 020 7741 4100 to request an application form.