With the PPI claim deadline upon us, this form of pension appears to be the next top target for claims firms.
Claims management firms are increasingly viewing self-invested personal pensions (SIPP) as the next potential mis-selling boom.
This week the Association of Member-Directed Pension Schemes told FTAdviser that it was “clear claims management companies are now targeting SIPPs”, following reports from SIPP provider Curtis Bank that it had seen a jump in the number of claims inquiries received.
There are a few factors behind claims management firms eyeing up SIPPs and the potential for mis-selling claims.
The first is simply that the PPI gravy train is coming to an end, with the deadline for PPI claims on 29th August this year. Claims management firms need to find other claims subjects, and SIPPs – as well as paid-for current accounts – have caught the eye.
But there’s also the fact that problems have emerged with the SIPPs market, making it ripe for claims management firms to move in.
Putting SIPPs in the spotlight
Over the last couple of years, there have been a number of very high profile cases involving dodgy investments being made through SIPPs, with the victims losing out on 10s – and even hundreds – of thousands of pounds.
These have ranged from putting money into storage units, plantations and ‘luxury’ holiday apartments, often in exotic locations like the Caribbean and South America.
Generally these cases have ended up with the Financial Ombudsman Service (FOS), and more often than not the Ombudsman has found in favour of the saver.
According to the most recent figures from the Ombudsman, in the three months to December last year, it received 1,029 new enquiries about SIPPs, up from 777 in the previous quarter, and upheld 59% of SIPP-related claims.
Indeed, the FOS now actually has a backlog of SIPPs cases which it can’t deal with, because of an ongoing legal wrangle with SIPP provider Carey Pensions, a situation which means that “hundreds” of cases are not being dealt with according to APJ Solicitors.
Do I have a case?
These mis-selling cases tend to follow a set routine, which usually starts with a phone call out of the blue. You’ll be given a pitch about an incredible investment opportunity with massive returns, which the firm may also promise to guarantee for the first couple of years.
There may be professional seminars afterwards too to convince you everything is legit, and when you get the annual statement from your SIPP, it may seem that all is fine as the statement will ascribe value to the investment.
The reality is different though, as these are not standard investments. Just because your SIPP says that the agricultural land in Costa Rica you own in worth £100,000, that’s entirely dependent on there being someone else who is willing to pay that.
This is a problem – all too often people who have been duped by these scammers have no idea until it’s far too late, as according to the paperwork, everything is fine.
Annuity mis-selling: how to tell if you have a case
The problem isn’t with SIPPs themselves
It’s important to recognise that the issues here aren’t with SIPPs as a financial product. I’m a big fan of SIPPs, and use one myself for my own pension investing.
For too long individual savers had precious little control over how their pension pots were invested, unless they had huge sums saved up and could afford the massive fees charged by the handful of SIPP providers.
Thankfully recent years have seen that change, with SIPPs now an affordable option for far more people, giving them licence to save for their twilight years in a way that suits them.
The trouble lies with some investors being pushed into shady investments, and some SIPP providers who have been more than happy for their products to house some seriously questionable investments.
The role of a claims management firm
Claims management firms have spent a lot of money advertising their wares to people that might have invested in something a little out-of-the-ordinary through their SIPP.
The idea is that you take your case to them, and they then handle the complaint on your behalf, taking a cut of any compensation you’re awarded.
I can definitely understand the appeal of using a specialist in order to handle a claim like this. Having already been duped out of my money, I’d want reassurance that I had someone on my side to help boost my case of at least getting some compensation back, even if those specialists would then get a cut of the money I received.
However, not all claims management firms know what they are doing. While some genuinely do have some legal expertise, there are plenty of others that are simply chancing their arm in the hopes of getting a few quid.
And let’s be honest here, you can take your case to the FOS personally – your chances of success aren’t automatically improved just because a claims firm has handled the paperwork for you. What’s more, if you do that, you’ll get to keep every penny of a payout, rather than hand a fee over to a claims firm.