Our Guide to SIPP Pension Scams & How to Claim Compensation

Len Burgess[1]

Len Burgess

Money Savings Advice Guide to SIPP pension scams

A Self-Invested Personal Pension isn’t the right choice for everyone. These types of pensions require an active investor that will carefully monitor their pension. Whilst a SIPP is flexible and can bring great pension growth, it comes with many risks and is not the best if you’re inexperienced.

A SIPP is a Self-Invested Personal Pension. As with all pensions, there is some potential for SIPP products to be mis-sold. Victims of SIPP pension scams can report them and claim compensation.

To fully benefit from a SIPP, you’ll need to choose the right investments and keep track of how things are developing. You might be mis-sold a SIPP, or hit by SIPP pension scams if you’re encouraged to go down this particular route despite not being an experienced investor.

Read on to find out more about SIPP pension scams and what to look out for and what to do if you have fallen victim to a pension transfer scam.

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What Is a Self-Invested Personal Pension?

Shortened to SIPP, a Self-Invested Personal Pension is a product that leaves you in control. You, the ‘self’ in the product name, will select your own investments and keep track of them. That’s how this type of pension is described as being Self-Invested.

Managed properly, a SIPP could be the key to a great retirement fund. Yet, there are many risks that must be carefully considered. Not everyone has the financial acumen to take full advantage of a SIPP.

A Self-Invested Personal Pension is much more flexible than most. You’ll have access to so many investments, with the chance to make your own selections. In exchange for flexibility you’re taking on more risk, must take control of your own pension funds and may have higher charges and fees.

What Is a SIPP Pension Scam?

Intentionally, or just through a lack of knowledge and experience, some pension providers and financial advisors might wrongly recommend a SIPP. SIPP pension scams might mean that you’re encouraged to transfer your existing pension funds to a SIPP. Once you’ve moved your money, you may lose out because your pension funds are badly invested.

Any advisor should be clear about the risks of Self-Invested Personal Pensions. They should talk you through what's involved in a SIPP and how active you'll need to be. You should be made aware of the potential losses, and a good advisor should ensure that you know exactly what you're getting into.

If you've been pushed towards a Self-Invested Personal Pension but feel that it isn't right for you, then you may have lost retirement savings as a result of bad financial advice.

Identifying a Potential Pension Scam

Sometimes, SIPPs are mis-sold by inexperienced but well-meaning financial advisors. Often, the problem is an outright illegal scam. If you're approached about your pension, it's highly likely that you're on a path to being scammed. Nobody should contact you out of the blue.

If you need pensions advice, look around for a reputable financial advisor that is waiting for you to contact them. Cold calling is a sure sign that a scam is about to take place.

In some cases, SIPP pension scammers will get their money by way of a commission for passing on your custom. Other scams result in your money being stolen, transferred to the scammer rather than a genuine SIPP.

How to Avoid a SIPP Pension Scam

Only get help from financial advisors that are approved by the Financial Conduct Authority. The FCA regulates the industry, and genuine providers of financial advice should operate under their watch.

SIPP providers might pay a commission if someone introduces new clients. Those same SIPP providers have a responsibility to check that you've been introduced by the right people and should check with the FCA to make sure it's all above board, but you can protect yourself by checking these details on your own.

A scammer will happily push you towards a SIPP if they're earning money for doing so, which means that it's especially important to make sure that you're not taken advantage of.

What to Do if You’re a Victim of a Pension Scam

If you believe that you've been a victim of a SIPP pension scam or mis-spelling, the first thing to do – if it's only just happened – is to contact your existing provider. Your current pension provider may be able to stop your money from being transferred out. If you act fast, you could stop your pension funds from moving at all.

If it's too late to stop your pension fund transfer, your next step is to contact the advisor that suggested the SIPP. If you don't get a response you're happy with; you can file a further complaint. You have up to six years to act or three years from the date that you realise you've been a misselling victim. If you've been the victim of a genuine scam, you can contact Action Fraud.

Contact the Pensions Ombudsman to escalate your claim. They might find in your favour, or decide that you haven’t been scammed. Their service is completely free and totally independent, so this is the easiest way to make a formal complaint if you’ve been mis-sold a pension.

You’re protected by the Financial Services Compensation Scheme. Thanks to the FSCS, you could be entitled to up to £85,000 in compensation. The amount of compensation you receive will replace the money you lost, and you may also be entitled to a modest sum for the emotional distress you’ve experienced.

If you have a joint pension account, the compensation limit is double to £170,000. You can use the Financial Services Compensation Scheme’s own protection tool to see how much of your pension is protected. You’ll just need to know the name of your bank, building society or credit union where your money is saved, and how much you own.

You can find the tool here - Financial Conduct Authority check your money is protected

Can You Get Help After SIPP Pension Scams?

If you’ve been the victim of a SIPP pension scam, you can make a claim on your own. Alternatively, you can find a representative to make a claim on your behalf. Get advice from solicitors if you think that your Self-Invested Personal Pension was mis-sold to you.

Using a solicitor or similar service can help to boost your chance of success. You’ll be supported by an expert team that have experience of these types of claims, and how to win them. However, you will need to pay for this service, whilst going it alone costs you nothing.

Decide how confident you are making your own claim, then see if you need extra help. Often the financial hit is worthwhile if it guarantees you some of your money back.

Will You Get Your Money Back?

If you’ve been the victim of SIPP pension scams, you’re certainly not alone. Pension scams have become very elaborate, which means that many people are caught out. Pensions cold-calling is banned, so no reputable company will contact you by phone to talk about transferring your pension. Still, if you’re not aware of the rules, you can easily fall victim to these methods.

You could lose a lot of money that you’ve saved for retirement if you become a scam victim. Action Fraud’s free helpline can help you get your money back, but success isn’t always guaranteed.

It helps to question everything you’re told and everyone who gets in touch. Caution is a positive trait if it protects you from SIPP pension scams.

Should You Try to Avoid Unregulated Pension Fund Investments?

As the term suggests, unregulated investments have a limited degree of protection and as a consequence can prove costly. While there are some unregulated investments that are perfectly legitimate, they all carry a higher degree of risk.

When you consider that a pension fund should be considered a long-term investment, do you really need to take additional risks with unregulated investments?

Can You Claim Compensation for Inappropriate SIPP Advice?

Yes. If you believe that you were given inappropriate advice regarding your SIPP investments or transfer, then you will be able to claim compensation. It is down to the claimant to prove that the defendant neglected their duty of care, and as a consequence, there was a financial loss for the claimant.

The degree of compensation will depend upon the specific details of the case, but with large SIPP transfers, we may be talking some relatively large figures.

Do You Need a Claims Management Company to Pursue Your Compensation Claim?

If you believe you have been the victim of a pension scam or inappropriate advice, you can pursue a claim yourself by the traditional route. You would first of all contact the SIPP administrator/financial adviser with details of your accusations and their feedback.

In the event that you did not receive an appropriate reply, you can then take your claim to the FCA/Financial Ombudsman. History shows that once the regulators get involved, this does tend to focus the minds of defendants a little more.

Alternatively, as some of these compensation claims can be relatively complicated, many people prefer to employ the services of an experienced claims management company.

How Do You Appoint a Claims Management Company?

The first thing to do is gather as much evidence as possible to support your accusations of a pension scam/inappropriate advice. The more paperwork you can provide the more chance of pursuing a claim.

At this point, a claims management company would review your evidence and look at the wider scenario. If they believe you have a minimum 60% chance of success, then they would likely offer to take up your case.

Money Savings Advice Tip

Being the victim of fraud can be incredibly stressful and getting adequate financial compensation can be challenging, difficult and also stressful which is why we recommend speaking with and dealing with a specialist claims management company.

How Much Does It Cost to Use a Claims Management Company?

The vast majority of claims management companies will offer a “no win no fee” arrangement which is why they tend to have a relatively high success bar. In exchange for a “success fee,” they will indemnify the claimant from any expenses which they incur pursuing the case. The “success fee” is an arrangement whereby the claims management company will receive a percentage of any compensation awarded.

What Is the Average Success Fee?

While the success fee will vary from case to case, it tends to average out at around 25% of the compensation awarded.

It Is Important to Pursue Potentially Liable Third Parties

While many people focus on the compensation element of pursuing claims against pension scams/inappropriate advice, this process goes far deeper. If potentially liable third parties are not held to account, then it is unlikely they will change their business strategies/services.

As a consequence, investors in the future would also continue to suffer financial distress. The “no win no fee” arrangement has been an integral part of this process.

How Can Money Savings Advice Help You With Making a Mis-Sold Pension Claim?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.

Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.


Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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