The FCA advised AMPS at the beginning of August that they had issued an alert highlighting some of the risks arising from authorised firms accepting business from unauthorised introducers and lead generators.
The opening two sentences serve a stark warning: ‘An authorised firm which accepts business from an introducer must meet its regulatory requirements. If customers are given unsuitable advice by an introducer, the authorised firm may be held responsible for this and subject to regulatory action.’

Now on first reading you would have thought the alert was directed specifically at adviser firms, and by in large it is. But the very fact that the FCA asked that AMPS made our members aware of the alert and that the document refers throughout to authorised firms and not specifically to authorised advisers, means that SIPP providers are included.

I would have to say that any such guidance is more than welcome. It covers areas of concern, what to look out for, your regulatory requirements and actions required to be taken.

It also finishes by restating its warning that the FCA ‘are co-ordinating their intelligence and supervisory activities on pension scams and unsuitable advice and will take action where required’. So not a warning to be ignored.

Now the SIPP industry has been dogged over the years in regard to pension liberation and dodgy investments scams.

But as the industry has become aware of the issues it has been pro-active and taken steps such as tightening up on who it will take business from, as well as carrying out more due diligence on non standard investments.

The problem is there can be quite a delay from an investment being accepted into a SIPP before it is identified as a scam. Take the example of an investment that guarantees a return of 10% per annum but only investigated four years down the line when the payments stop.

Though the SIPP provider has tightened its due diligence procedure and would not accept the investment now it’s the failure of an investment accepted 4 years ago that hits the headlines. An alert is meant to put you on your guard, so is this alert too late and taking action after the horse has bolted?

The sad and somewhat depressing fact is that those involved in such scams are happily grazing on new pastures and appear to keep way ahead of the regulatory authorities.

We have seen the scammers move from SIPP to SSAS to pension freedoms as a means of ripping off the unwary and who can predict what will be next as these opportunities are closed off.

So, though the alert is somewhat belated, hopefully it is preaching to the converted. However a lot more is needed to be done and at a far greater pace.