If you suspect you have a mis sold SIPP, it’s good to act quickly and gather evidence, such as correspondence with your adviser, investment records, and financial statements. 

Then, make a formal complaint with the financial adviser or firm responsible for the mis-selling. 

If you’re unsatisfied with their response, or if they don’t reply within eight weeks, you can escalate your complaint to the Financial Ombudsman Service (FOS)

In this article, we’ll cover everything you need to know about mis-sold SIPPs, including how to spot one, how to claim compensation and much more. So, let’s dive in!

What is classed as a mis-sold SIPP?

A mis-sold SIPP occurs when you’re given poor, incorrect, or misleading advice by a financial adviser or firm, leading you to invest in a SIPP that isn’t suitable for your needs or risk profile

This might’ve happened if the adviser:

  • Didn’t properly assess your financial situation, needs, or goals
  • Failed to explain the risks involved in the investment
  • Recommended high-risk, unregulated investments without considering your risk tolerance
  • Pressured you into making a decision without giving you enough time to think it through

Understanding financial suitability

To better understand what a mis-sold SIPP looks like, it’s essential to know what “suitability” means in a financial context. 

Financial suitability refers to how well an investment product, like a SIPP, aligns with your individual circumstances, financial goals, and risk appetite

When SIPP advisors recommend a SIPP, they must consider various factors to ensure the product is suitable for you. 

They’ll usually provide you with what’s called a ‘Suitability Report’, which is a detailed document summarising why they believe their recommendations are the most suitable for your circumstances and needs.

The role of financial advisers

Financial advisers play a crucial role in helping you make informed decisions about your investments

They should take the time to get to know you, understand your financial objectives, and assess your risk tolerance

They should also ensure you fully comprehend the potential risks and rewards associated with the recommended investments.

If an adviser fails to do this, they may be guilty of mis-selling a SIPP.

Can I claim for a Mis-sold SIPP?

Yes! If you believe you’ve been mis-sold a SIPP, you’re well within your rights to make a claim for compensation. 

But first, you’ll need to gather evidence to support your claim, such as any correspondence with your adviser, details of your investments, and proof of any financial losses you’ve incurred as a result of the mis-selling.

Evidence you’ll need for a claim

To build a strong case for your mis-sold SIPP claim, you should gather the following types of evidence:

  1. Correspondence with your financial adviser, such as emails, letters, suitability reports, or meeting notes that discuss your SIPP or the investments within it
  2. Your SIPP contract, including any terms and conditions or product literature provided by the adviser
  3. Financial statements or records that show the performance of your SIPP and its investments
  4. Any additional documentation that demonstrates the unsuitability of the SIPP, such as a risk assessment questionnaire or your investment objectives

How do I claim for a mis-sold SIPP?

To claim for a mis-sold SIPP, you can either:

  1. Lodge a complaint directly with the financial adviser or firm responsible for the mis-selling
  2. Contact the Financial Ombudsman Service (FOS) if you’re not satisfied with the firm’s response or if they don’t respond within eight weeks

The complaint process

When lodging a complaint, it’s important to follow a structured process:

  1. Write a formal complaint letter, either by post or e-mail, detailing your concerns and outlining the evidence you’ve gathered to support your claim – tip: make sure to explicitly say that you’re making a complaint
  2. Send the complaint letter to the financial adviser or firm’s designated complaints department via email or post, ensuring you keep a copy for your records
  3. Wait for a response from the firm; they should acknowledge your complaint within five business days and provide a final response within eight weeks
  4. If you’re unhappy with the firm’s response or if they don’t respond within eight weeks, you can escalate your complaint to the Financial Ombudsman Service (FOS)

Financial Ombudsman Service (FOS)

The FOS is an independent body that helps resolve disputes between consumers and financial services providers, including claims related to mis-sold SIPPs. 

If you decide to escalate your complaint to the FOS, they will review your case and make a decision based on the evidence you and the financial adviser provide.

To submit a complaint to the FOS, you’ll need to:

  1. Complete the FOS complaint form
  2. Attach copies of your evidence, including any correspondence with the adviser and your original complaint letter
  3. Send the completed form and supporting documents to the FOS via email or post

Keep in mind that the FOS has a six-month deadline for submitting a complaint after receiving the final response from the adviser or firm.

How do I know if I was mis-sold my SIPP?

It’s not always easy to tell if you were mis-sold a SIPP, but here are some common signs:

  • You weren’t informed about the risks associated with your investments
  • The investments recommended were unsuitable for your risk tolerance or financial goals
  • You were pressured into making a decision or weren’t given enough time to think things through
  • The financial adviser didn’t properly assess your financial situation, needs, or goals, such as analysing your income vs expenditure and what your ideal retirement would look like, and planning for ‘what if’ scenarios

Spotting the warning signs

Being able to spot the warning signs of a mis-sold SIPP can help you determine whether you have a valid claim. Watch out for the following red flags:

Lack of clear, transparent communication

If your adviser didn’t explain the SIPP and its associated investments in plain English, you may have been mis-sold.

No clear explanation of fees and charges

Your adviser should’ve been upfront about all fees and charges related to the SIPP and its investments. If they weren’t, this could be a sign of mis-selling.

Inadequate documentation

Your adviser should’ve provided you with all the necessary documentation related to the SIPP and its investments, including product literature and a suitability report. If they didn’t, this could be a sign of mis-selling.

What about poor performance?

Poor performance of your SIPP doesn’t necessarily mean you’re eligible for compensation. 

If your adviser recommended investments that were of the appropriate risk level for you, but they performed poorly, the advice you received still could be deemed as ‘suitable’ – nobody can predict the ups and downs of stock markets and specific investments.

However, if you think the investments they recommended were too risky for your tolerance, then you could have a case. 

So, if you think your investments went down too quickly and were too volatile for what you were comfortable with, you can definitely consider making a claim.

Top 5 reasons SIPPs are mis-sold

  1. Inadequate risk assessment

Financial advisers should assess your risk tolerance before recommending investments.

  1. High-pressure sales tactics

You should never be pressured into making an investment decision.

  1. Unsuitable investments

If the investments recommended to you were unsuitable for your financial situation or goals, you might have a case for mis-selling.

  1. Lack of transparency: 

Financial advisers must be upfront about fees, charges, and risks associated with investments.

  1. Unregulated investments: 

Some advisers recommend high-risk, unregulated investments that aren’t suitable for most investors.

The consequences of mis-selling

The impact of a mis-sold SIPP can be far-reaching, affecting not only your financial well-being but also your mental and emotional health:

  1. Unsuitable investments can result in significant financial losses, potentially derailing your retirement plans or other financial goals.
  2. Dealing with the fallout of a mis-sold SIPP can be incredibly stressful, particularly if you’re facing financial difficulties as a result.
  3. Being mis-sold a SIPP can damage your trust in financial advisers and the financial services industry as a whole, making it difficult to seek help in the future.

When you make your case, be sure to think about how your advice has affected you in each of the above ways and make it clear in your complaint or claim how you feel, and give evidence where you can.

How much compensation could I get?

The amount of compensation you could receive for a mis-sold SIPP will depend on several factors, including:

  1. The extent of your financial losses
  2. The level of negligence by the adviser
  3. The impact on your financial goals

Compensation amounts can vary widely, but it’s not uncommon for successful claimants to receive thousands of pounds. 

Keep in mind that the goal of compensation is to put you back in the position you would’ve been in had you not been mis-sold the SIPP. 

This means that the compensation amount will typically cover your financial losses, any interest or profits you would’ve earned if you’d been advised correctly, and any additional charges you incurred due to the mis-selling.

How compensation is calculated

When calculating compensation for a mis-sold SIPP claim, the following factors are typically taken into account:

  1. The amount of money you initially invested. 
  2. The performance of your SIPP investments. 
  3. The fees and charges associated with your SIPP.
  4. The interest you would’ve earned had you not been mis-sold the SIPP. 
  5. Any emotional or mental distress the situation has caused you. 

FAQs

What is the time limit for a mis-sold SIPP?

The time limit for a mis-sold SIPP claim is generally six years from when the SIPP was set up or three years from when you became aware (or should have become aware) of the mis-selling. Act promptly to ensure your claim is considered.

What happens if a SIPP provider goes bust?

If a SIPP provider goes bust, you may be able to claim compensation from the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 per person, per financial institution for claims related to regulated financial advice.

Keep in mind, your SIPP provider can’t use your SIPP money to pay for their creditors if they go bust. Investor money is ring-fenced for your protection.

Can I claim if my SIPP has lost value?

If your SIPP lost value due to mis-selling or poor advice, you may be eligible for compensation.

You’ll need to prove that the financial adviser or firm didn’t act in your best interest or follow proper procedures when recommending the SIPP and its investments.