SIPP Scams: The Three Signs of Certain Mis-selling

You might have heard about SIPPs (Self-Invested Personal Pensions). This is simply where, with the help of a financial advisor, you withdraw from your existing pension pot and invest the funds into some sort of scheme or product.

wind farms - an example of SIPP scams

Whilst there can certainly be benefits to doing this if done sensibly and with great consideration, SIPP scams have also caused people to lose their entire pensions. The Independent reported that one unfortunate person lost £40, 000 worth of savings. In the 2019 financial year the Financial Services Compensation Scheme (FSCS) paid out a whopping £123m on Sipp-related claims. This is forecast to rise to £209m in 2020/2021. So, if you’re considering this avenue, look out for the telling signs of SIPP scams:

1. Cold-callers

Receiving a cold-call offering a free pension review, or someone offering to refer you to an Independent Financial Advisor is indicative of mis-selling. If someone calls you out of the blue and says they can boost your pension ten-fold, then sadly it probably is too good to be true.

2. Unusual Investments

A high number of failed SIPPs have involved some kind of unusual investment. For example, South American forestry programmes. Alternatively, investments in vineyards or rice-fields, wind farms or solar panels.

However, this is not to say that any of these things cannot be fruitful. Make sure to do your research and ensure that this advice is coming from an expert, and more importantly REGULATED, source.

These types of unusual investments are often used by mis-sellers because very little data exists around the investments. Thus, making it harder for the victim to gain any real knowledge about whether this is a sound investment or not.

3. Sales Speak

If your IFA is using overly salesy terminology, there is a good chance that they do not have your best interests at heart. For instance, if the SIPP is being described as ‘low risk’ or ‘high reward/return’ then alarm bells should ring.

Furthermore, if your IFA is seemingly pressuring you, then this is a clear sign of mis-selling. This pressure could be applied by asking you to release funds by inflicting deadlines. IFAs might state that an investment will be more productive if you do it ‘sooner rather than later’.

Again, if you have a trusted and regulated source advising that an investment is low risk then this isn’t necessarily a bad thing, but you can tell a lot from an advisers tone. Remember, this is your money that you’ve worked to save. Don’t let anybody rush you out of it.

Be Safe, Seek Advice

I must stress that the three techniques above, are not inherent mis-selling. However, they are good indicators. The most important thing to consider is who your advisor is and whether you understand and are comfortable with the investment. What are their credentials? Are they regulated? Are you in a secure enough position to risk capital?

Don’t throw years of hard work down the drain by allowing someone to sell you the world. If you’re unsure always seek further advice. If you feel you have been mis-sold a SIPP we may be able to help you claim. Fill in the form, call on 0800 862 0605 or email