Go back

How can you tell if your adviser is legitimate?

Go back


Unfortunately, a small number of pensions advisers have given a bad name to what should be a trustworthy and well-regulated industry. A good adviser always puts their client’s best interests first.

The Sipp (self-invested personal pension) is the most commonly mis-sold type of pension. Sipps were introduced a few decades ago, but were unregulated for much of this time. They provide an alternative for people who wish to move away from workplace pensions and invest elsewhere.

Many people have been caught out by scammers and unregulated companies, who have offered to invest their money in either risky, mis-sold or fraudulent schemes.

Here are 10 red flags you should look out for when dealing with Sipp investment advice:

1. Cold calling / unexpected contact

The vast majority of pension scams or mis-sold investments start with an unsolicited phone call from an “adviser”.

Callers may ask: “Is your pension working?”, “Could your pension be doing better?”, “Will you have enough to support you when you stop working?” This is a cold-call script, read out by someone unqualified to offer you pension advice, and in reality, they know absolutely nothing about your financial situation.

A legitimate financial adviser will not contact you out of the blue unless you get in touch first for advice, so if you receive a phone call from an adviser or third party offering you a “free pension review”, be very wary.

2. Time-sensitive offers

Cold callers and scammers often tell victims that the investment opportunity has a limited time frame, to encourage them to invest quickly without doing their research. In reality, genuine financial advisers would not hurry people into making urgent decisions or operate within limited time frames with special or time-sensitive offers.

3. Not FCA authorised

Any genuine financial firm will be authorised by the FCA. Many will claim that they are authorised, but we always recommend that you check the FCA register to ensure that you are dealing with a bona fide firm that is authorised to give financial advice. Another benefit of using an FCA approved company is that if things go wrong, you may be able to get your money back through the FOS or the FSCS.

4. Claim that you can access your pension before 55

Often, scammers will offer you the opportunity to access your pension before the age of 55, which can seem very attractive to some pension holders.

Often the information is misleading and could leave you with a very hefty tax bill, as there are only very limited circumstances (for example terminal illness) in which you can remove money from your pension before you are 55.

5. Dodgy contact details

If the only contact details you are offered are mobile numbers, or the website provides PO boxes instead of an office address, be vigilant. Genuine firms will be able to provide proper contact details including office telephone numbers and a legitimate postal address.

6. Advised to switch your DB pension to a DC one

Pensions are either classified as Defined Benefit (DB) or Defined Contribution (DC). Defined Benefit schemes, usually workplace pensions, are extremely valuable because they offer a guaranteed, inflation-proof income. Defined Contribution pensions, on the other hand, can fluctuate depending on the financial landscape.

If you have been advised to switch your DB pension to a DC scheme, be wary. The FCA raised concerns after research found that 69% of people were advised to make a switch, despite its view that the majority of them would have been best advised to stick with a reliable DB scheme.

7. Bad press / on the FCA’s warning list

It’s imperative that you do your research before agreeing to any large financial decisions. Always check out the firm online to see if they have attracted any negative press coverage, received bad reviews or feature on the FCA’s warning list. Fifteen minutes of internet research could save you years of hassle and heartache. If the firm has received any negative publicity, you should avoid them.

8. Bulldoze you into making decisions

Scammers and dodgy advisers will often bulldoze victims into making quick decisions. If you feel at all railroaded or forced into making quick decisions, ask to take the adviser’s contact details and tell them you will ring them back after you have considered the decision. Legitimate firms and advisers will never bulldoze you into making snap decisions over something so important.

9. The adviser told you to invest in an unusual scheme

Over the years, we have dealt with many unscrupulous firms who have scammed or mis-sold pensions investments, and there are several investments that we can flag as extremely high risk. The main ones are:

  1. Forestry schemes
  2. Hotel rooms
  3. Storage Pods
  4. Green investments
  5. Overseas property

These investment types cannot offer the returns promised and some are even under investigation by the Serious Fraud Office. If you are offered investments in any of these schemes, be very cautious.

10. Too good to be true

The age-old adage still stands – if it sounds too good to be true, it probably is!

If you believe you may have been mis-sold a Sipp or caught out by scammers, get in touch today. Our expert legal team can assist you with securing the maximum compensation you deserve.