A number of firms and individuals have been subject to enforcement action by the Financial Conduct Authority (FCA) for improper conduct relating to Self-Invested Personal Pensions (SIPPs).

However, in late September 2018, the Insolvency Service took its own action, and banned four company executives from acting as directors or company managers, all as a result of their conduct in executing SIPP transactions. The four have been disqualified for a total of 34 years.

The four men all controlled different companies. One director represented two introducer firms who made cold calls regarding potential SIPP investments, one represented a firm that was funding the introducer, and two more controlled firms that were operating the SIPP schemes themselves.

The individual from the firm that funded the introducers was deemed to be carrying out the duties of a director, even though he had not been formally appointed to that role. He was banned for nine years for failing to ensure his firm maintained or delivered adequate accounting records. Because the accounting records were deficient, the authorities could not determine the purpose of various payments that were made out of the firm’s bank account, and the reason why significant sums were paid to the individual director.

The director of one of the SIPP operators was disqualified for seven years. He is said to have acted as a director despite lacking the relevant knowledge and understanding to manage a pension scheme. He also failed to take sufficient steps to safeguard returns on investments, and the scheme members collectively lost £560,000 as a result.

Similar criticisms were made of the director of the other SIPP operating firm, and he was also found to have failed to keep adequate accounting records. He was disqualified from acting as a director for nine years.

Finally, a director of two introducer firms was also disqualified for nine years. The firms made false and misleading claims about their level of expertise and experience, in order to induce prospective investors to transfer their pension savings into the SIPP. Misleading claims were also made about the range of investment products that would be available within the SIPP.

The two SIPP operating firms are subject to further investigation by the Serious Fraud Office.
Ken Beasley, Official Receiver for the Insolvency Service’s Public Interest Unit, said:
“You may have seen the current campaign by the Financial Conduct Authority, where they recommend that you reject unexpected offers, especially those originating from a cold call. You should check who you are dealing with, avoid being rushed or pressured into making decisions and seek out impartial advice before going ahead with any pension transfer.
“Suspicions should also be raised if you are promised high or guaranteed returns, unusual investments or complicated structures, high-pressure sales tactics, involvement of several parties, all taking a fee which significantly cuts into your pension pot, and long-term pension investments which could take years before you realise something is wrong.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article