Don't Be Taken In
Fraudsters target SIPP holders ...
Posted by Richard Lawrance on 26/07/2012
Self Invested Personal Pensions, (SIPPs) have become very popular with many self employed people and company directors. The ability to hold a wider range of investments including commercial property gives them a degree of flexibility that is very attractive to investors ...
fraudsters are targeting self invested personal pensions with high risk investments
For example, many business owners have been able to transfer their own business premises to their SIPP with beneficial tax planning results for themselves and their business. However this ability to hold alternative investments has made them the target of unscrupulous promoters of unregulated and unsuitable investments.
The situation has got worse over the last year and the Serious Fraud Office is now carrying out a major investigation. According to a report in Financial Adviser, at least £200 million is at risk from fraud in SIPPs. Jean de Lozey, joint head of the fraud business area for the SFO said, "people are being encouraged to disinvest their pensions and put them in highly speculative schemes."
Many of the recent scams involve property or bio-fuel investments, however there are a number of other unregulated collective investment schemes that can trap the unwary. In April this year the SFO announced that 2,000 investors may have lost a total of £40 million through investment in an insolvent bio-fuel investment company used by 12 to 15 SIPP providers.
Unfortunately for the investors it is only when the investment starts to go wrong that they discover that there is no compensation available due to the unregulated or fraudulent nature of the scheme. The Financial Service Authority is now taking steps to limit the scope for these dodgy schemes through tighter regulation, however in the meantime they continue to be marketed aggressively by their promoters.
For this reason any SIPP holder should take great care when considering their investments and it is always worth taking advice from an Independent Financial Adviser. Any reputable IFA will be regulated by the FSA and will be happy to explain their qualifications for providing pensions and investment advice.
Until next time ...
GRACECHURCH WEALTH MANAGEMENT LLP
Richard Lawrance is an independent financial adviser at Gracechurch Wealth Management LLP based in Milton Keynes. He mainly provides advice on pensions and investments to private clients and has a wide experience of working with SME business owners. Richard is married with two teenage children and his interests include rugby, skiing and fly fishing.