Mis-selling complaints are on the rise. The complaints have resulted in SIPP payouts rising from £105 million to £112 million in the last year.
The last two years have seen a total of £405 million paid out in compensation due to a rise in SIPP complaints.
Figures in the Financial Services Compensation Scheme (FSCS) annual report reveal that 69,980 customers received a payout in the 2017/18 tax year.
SIPP payouts on the rise
FSCS chief executive Mark Neale said: “Just over a fifth of the claims we handled in 2017/18 arose from pensions advice.
“This rising tide of pension-related claims underlines the risks that consumers face as they make increasingly complex choices about financing retirement and, therefore, the importance of raising awareness of FSCS protection outside of deposits.”
The Financial Ombudsman Service (FOS) recently reported that SIPPs were one of the most complained-about products last year.
The FSCS has also reported soaring numbers of compensation claims related to SIPP advice from now failed firms.
Why have SIPP claims soared?
The significant rise in SIPP complaints indicates there is something bigger happening within the industry. A FOS spokesperson suggested that the type of investment is driving the number of complaints.
An FOS spokesperson says: “Most are around unregulated collective investment schemes. Inevitably some fail, so we receive complaints around the advice to invest in those products.”
Levies go up
Earlier this year the FSCS announced plans to up the amount it levies from the industry by 16 million. This includes raising money for pension providers for the fourth year in a row as SIPP claims continued to mount.
The Financial Conduct Authority (FCA) published a paper on May 1st. The paper outlined details of how much compensation would need to be paid. They will go ahead proposals that will require product providers to pay a quarter of compensation costs. These costs usually fully fall on advisers.
Do you think you may have been mis-sold a SIPP? Speak to one of our expert solicitors to see whether you have a claim.