MP Frank Field demands clarity over regulation of 'unscrupulous' Sipps

Josh Mines
Chair of the work and pensions committee Frank Field (right) has asked the FCA for clarity over the repercussions that firms who break regulatory rules face

An influential Labour MP has demanded that the Financial Conduct Authority (FCA) clarify exactly what repercussions Self-Invested Personal Pension (Sipp) providers face for breaking regulatory rules.

In a letter to the FCA's director of investment, wholesale and specialist supervision Megan Butler, Field claimed Sipps were "the primary vehicle used by unscrupulous advisers to channel individuals' pension savings into unsuitable investments".

Field, who chairs the Work and Pensions Committee, noted that while the FCA had been clear about what it expected from Sipp providers in terms of due diligence, it was unclear what the repercussions would be for providers who do not meet expectations.

Read more: 5 reasons to consider a Self Invested Personal Pension (SIPP)

"Primary responsibility for paying compensation for mis-selling falls to the financial adviser, who can evade this by folding their firm," he wrote.

It follows the committee publishing a report on the British Steel Pension Scheme (BSPS) scandal in February, which found that many steelworkers had been "bamboozled" by financial advisers who told them to transfer out of their scheme.

Read more: British Steel pension mis-selling scandal "more serious" than PPI

Many clients of BSPS transferred their pension pots to cheaper Sipp providers, who are sometimes unregulated.

Field later quoted data from the FCA which found pension transfers had more than doubled in 2017 to nearly £21bn, which he said "heightens concerns about the destination of these funds."

In the letter, the Labour MP asked a number of questions of the FCA, including what the value of funds transferred from defined benefit pension schemes into Sipps was over the last two years and what powers the FCA had to punish Sipp providers for failure in due diligence.

It also asked whether the FCA was considering banning unregulated or non-standard investments from inclusion in Sipps.

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