Greg Kingston, group communications director at Curtis Banks, adds, however, that the vast majority of well-publicised cases are old, and from a time when the regulatory guidance was vague and insubstantial.
“Although there have been some attempts to rewrite history in that regard, Sipp operator responsibilities have gradually become better defined since 2012 onwards,” he explains.
“The quality of business written since then will have sharply improved with most – but not all – Sipp operators.
"Before, in the majority of cases, let’s not forget it was often an authorised regulated financial adviser recommending the transfer. Many of those were allowed to phoenix from firm to firm, again and again, and dodge the responsibilities for their actions.”
A Sipp’s place
There is an ongoing dialogue within the industry around what actually constitutes a Sipp, but, in short, they generally offer more choice to clients than most other forms of registered pension schemes.
Ms Trott says: “There has been significant change in Sipp provider due diligence over the years to try and stop clients being disadvantaged by those trying to sell unsuitable or fraudulent investments.
“In most cases, Sipp providers won’t accept business from unregulated introducers at all now.
"This is a battle that I believe the Sipp market is now winning but clients should still be wary of any promises from investment firms or introducers of offers that are ‘too good to be true’, as there is always bound to be a catch.”
Fos data mirrors this view as between October and December 2019, there were 88 cases taken to the Ombudsman about Sipps, compared with 212 cases for the same time period in 2018.
New Sipps continue to be written in significant numbers, from simple platform-type Sipps offering a restricted range of investments, to full bespoke Sipps offering a wide range of investment options, including commercial property and hedge funds.
“There remains a demand for Sipps – in one form or another – throughout the industry,” claims Mr McPhillips.
“Advisers continue to recommend Sipps to clients where these fit their circumstances, needs and requirements.
"Indeed, depending on the complexity of the client’s needs, a Sipp might be the only vehicle that is actually suitable.”
Mr Kingston echoes these views, arguing that in spite of the negative headlines, Sipps still hold merit.
“The poor actions of a few should not prevent the still much-needed features, pricing and service differentials offered by Sipp operators,” he says.
“Today’s consumer, and adviser, must be ever more discerning to ensure that they make the correct choice of Sipp.”
