The truth about companies implying you may have been mis-sold a SIPP or are owed compensation

Beware the claims of the claims companies !!!

In this article we will discuss the increasing number of companies who are encouraging customers to become concerned about their SIPP and therefore employ the company to complain on their behalf. You may have seen or heard adverts saying

Were you mis-sold a SIPP

Have you lost money on your SIPP

People in your area are claiming thousands in SIPP compensation

and so on . . . .

In this article we will help you understand and decide whether you have a genuine complaint or not. FUTHERMORE, WE WON’T CHARGE YOU A PENNY FOR IT !!

We will also discuss the tactics these companies use via questionable marketing claims made to lure customers in, and how these companies leave you open to a counter claim via the Fraud Act 2006. Most importantly, if you are owed compensation, we will show you how you can claim it for yourself thereby keeping all of the compensation for you and your family. You don’t need to pay high fees, or give away compensation to another company as the process for claiming compensation is entirely free.

Just one final point, if you think we are publishing this article because we are concerned that we may face SIPP compensation claims – then please think again. While we have arranged SIPPs for some of our customers, these customers represent a significant minority of our business as for most of our customers other products have been deemed more suitable. This article hopefully helps some people think twice before unnecessarily engaging with a company that is going to make money by encouraging them to make false complaints which expose them to risk.

What is a SIPP ?

SIPP stands for Self Invested Personal Pension. Very simply it is variation of a standard personal pension that presents the customer with some investment options that are not available via the standard personal pension.

You don’t need a SIPP to have flexible access to your pension, a standard personal pension will do just as well. This means that just like any other financial product, a SIPP will be suitable for some people and for others not.

So do I have a claim for compensation ?

This should be something you should be able to answer for yourself almost immediately. It is not as difficult a question as the claim companies lead you to believe and you will know if you have a complaint about your SIPP or not. So, thinking about your SIPP :

  • Is there anything you are unhappy about?
  • Has something come as a surprise to you?
  • Are you not able to do something with the SIPP that you were told you would be able to do?
  • Were you promised something that you now can’t have?

If you can answer ‘yes’ to any of the questions above, then you have a legitimate complaint and if you have suffered an unfair financial loss you will be compensated. You can follow instructions in the ‘How to complain’ section below.

As a point of interest, we did not include your SIPP losing money as a reason to complain in the list above. This is one of the reasons that feature heavily in the marketing campaigns of the claims management companies but as we will discuss later, it is misleading and is unlikely to be a genuine reason for a claim.

What would you do ?

So if you haven’t been able to answer ‘yes’ to the questions above, should you nevertheless employ a claims management company to complain in any case ? Much will depend on how you would act in the following scenario :

Would you complain ?

Imagine you are having a night out in a restaurant with some family and friends. The restaurant owner has made you feel welcome, the food, wine, atmosphere and service have all been of the required quality and the night was what you expected and wanted. When the bill arrives you happily pay it and even leave a little extra as a tip.

As you step out of the restaurant you are approached by a stranger who says they will go back inside and get the owner to refund the cost of your entire meal and give you a little extra as compensation. You inform the stranger that you are not aware that there was anything wrong with your meal. Nevertheless, they tell you it doesn’t matter, they will go in and get your money back anyway.

Would you take the stranger up on their offer ?

We would suggest that any self-respecting and honest citizen would have nothing to do with the stranger. In fact, it is difficult to find the appropriate words to describe anybody who would take the stranger up on their offer !!

This in effect is what happens when a claims management company takes on the case of a customer who does not have a specific complaint but is led to believe by the management company that they should nevertheless complain. As we shall discuss later, this action runs the risk of both the customer and the claims management company being accused of fraud.

So, the key point is, if you have a genuine grievance about your SIPP there is a free and easy way to make a claim and receive compensation if you are entitled to it.

Questionable Marketing

Of course, every business needs to promote itself to potential customers and this needs to be done in a quick eye-catching way. However, some of the tactics and claims made by these companies are questionable to say the least. We feel there are two areas in particular where significant concern exists.

Unprovable or Unfounded Claims

Very simply some of the statements made by these claims’ companies (particularly on social media) cannot be verified and they have no data to support them. What follows is a genuine marketing claim made by just one company :

“Hundreds of thousands of Brits who have invested hard-earned savings into an underperforming self-invested pension scheme are being urged to check if they can reclaim huge portions of their lost money”.

Really!! Is this true? Let’s look at this claim in some more detail. Firstly, who is it that is doing all this alleged ‘urging’? Well it’s not the regulator, not the government nor any official or recognised consumer body or organisation. The truth is that there is no official ‘urging’ or encouragement of any sort suggesting customers check their SIPP.

Next, several claims are made but all feature as part of one overall sentence leading you to believe that the entire picture is true. As such it implies that there are ‘Hundreds of thousands of Brits’ who are in ‘under-performing self-invested pension schemes’ who can ‘reclaim huge portions of their lost money”.  Where is the data to support this ? The claim could be true, but there is no source in the industry, that we are aware of, that can be referred to that supports such a claim. This sentence is meant to make you feel that there is something wrong will thousands of SIPPs which are underperforming and all losing money, that it is somebody else’s fault, and that a higher authority is requesting and urging you to take action. It is utter nonsense !!!

Furthermore, the false premise that if a SIPP is underperforming or has lost money, means it is likely to have been mis-sold, is repeated.  

We have seen one add on Social Media where the company says people ‘should’ complain. This is a highly questionable marketing claim and one which we believe goes beyond the required advertising regulations.

Such claims breach regulatory standards

It is an accepted standard that all advertising must be clear, fair and not misleading. Claims management is also a ‘regulated’ business. This means that they also have additional integrity standards they must abide to, one of which is they must provide “evidence” to support their marketing claims. We suggest there is no reliable independent source who could give evidence to support the claim made in the section above. As such it would be misleading advertising.

Here are some other misleading claims :

People in [insert your area] are receiving thousands in SIPP compensation – This is intended to make you feel that there is something happening close to you, that you are yet to take part and that a large financial reward awaits. Hurry up or you’ll lose out! The words are intended to imply that an unusual trend is occurring, and you are missing out.

But think about these statements :

People in Surrey are winning thousands on the National Lottery ! – isn’t it a likely fact that given the number of people who play the lottery in Surrey that thousands of pounds have been won? This doesn’t mean that everybody has won thousands, some (likely to be the majority) may have only won £10. Nevertheless, cumulatively thousands of pounds of lottery money has been won by people in Surrey. Does this mean you should move to Surrey to improve your chances of winning the lottery ?

People in Durham are buying over a million pints of milk each week !  – of course, they are !!! It’s the same for people all over the UK and has been for years. It doesn’t mean individual people are all buying a million pints each, but rather the sum total of all the milk sold to people in Durham each week is over a million pints. It is the normal situation and you are not going to suddenly rush out and fill your fridge with milk on the strength of such a statement.  

So, for the original claim “People in [insert your area] are receiving thousands in SIPP compensation” to be true, all that is required is for 21 people to have complained and received £100 each in compensation. Nothing exceptional.

All these claims are doing is presenting the standard situation and trying to present it as extraordinary and make you feel like you are missing out. They nevertheless imply something else.

Has your SIPP lost money ?

This is an interesting if somewhat puzzling claim. As a point of interest, this article has been written during the Corona Virus lockdown of 2020. One of the impacts of the virus was that the majority of financial investments (not just SIPPs) lost money. Does that mean that everybody who has a pension or investment has been mis-sold? –  No ! Whether you bought your SIPP direct from the provider or through an adviser, we find it difficult to believe that they did not make you aware in writing of at least one of the following :

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances

Equally, in our experience, most customers go into investments saying they understand there are no guarantees. While of course it is annoying and worrying to lose money in any investment, most firms can prove they made the customer aware of the risk, and the customer equally understood the risk going in. Therefore, we fail to understand poor performance is being used as the basis of a complaint.

Of course, if your adviser promised your pension would grow, or invested you in something that was not compatible with your risk profile, or without your knowledge, then you clearly would have a complaint. However, this would be easy to demonstrate, and you could do it yourself.

There have, of course, been a few SIPP complaints that have ended up in the Courts – not the Small Claims or County Court but rather the High Court and the Court of Appeal. These are clear disputes between the customer and the company, and no third party was required to identify the issues being complained about. Equally, the costs for such cases is bourne by the customer. The most recent SIPP case that has ended up in the High Court was Adams vs Carey Pensions UK. The customer (Mr Adams) lost and therefore also has to pick up everybody’s legal costs.  So, if you think your claims management company is going to foot the bill for taking your SIPP provider to the High Court – think again !!

Potential Fraud

If you think back to our restaurant example above, the stranger was trying to get the customer to complain, even though both the stranger and the customer were not aware of any specific complaint they could make. This was done solely with the intention of making money by making baseless claims. This is Fraud.

Equally when a claims management company encourages a customer to complain about a SIPP then when it is clear that neither they nor the customer is aware of a specific complaint, then, we believe, they run the risk of being charged with fraud.

Section 2 of the Fraud Act 2006 says :

2Fraud by false representation

(1)A person is in breach of this section if he—

(a)dishonestly makes a false representation, and

(b)intends, by making the representation—

(i)to make a gain for himself or another, or

(ii)to cause loss to another or to expose another to a risk of loss.

(2)A representation is false if—

(a)it is untrue or misleading, and

(b)the person making it knows that it is, or might be, untrue or misleading.

(3)“Representation” means any representation as to fact or law, including a representation as to the state of mind of—

(a)the person making the representation, or

(b)any other person.

(4)A representation may be express or implied.

(5)For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

 

While there is nothing wrong in making a claim if you genuinely believe you have a legitimate complaint, if you are embarking on a ‘fishing’ expedition (even if another company is doing it for you) then you run the risk of being accused of fraud. The key line in the act says :

the person making it knows that it is, or might be, untrue or misleading

In other words, you cannot make a complaint just to try your luck. If you have not identified a specific complaint but nevertheless the claims company submit a complaint on your behalf that ‘might be’ untrue, then you both run a significant risk. While it has yet to be tested, a company that has spent a considerable amount of time and money defending a false claim that was not upheld, might very well be inclined to report a case of fraud to the police and seek repayment of their costs via the Courts . 

Genuine Complaints and How to Complain

There are undoubtedly genuine complaints made about SIPPs where the customer is indeed owed some form of redress. These however should be clear, such as being invested in higher risk investments than agreed or indicated by your risk profile or where you have been misled with regards to how the SIPP would work. The list in the section ‘So do I have a claim for compensation ?” is a good guide.

If you set the SIPP up yourself or you took advice but acted against that advice, then it would be hard to understand what your complaint was.

The process below is the formal process outlined by the regulator The Financial Conduct Authority. This is the process that all customers must follow, and it is entirely free. This is exactly the same process the claims management company must follow.

First write to the firm who set the SIPP up for you. This will either be the SIPP provider or an adviser.

Tell them exactly what your concerns / complaints are

They may come back to you asking for further information

Ultimately, they will get to a ‘Final’ decision where they will either uphold your complaint and provide redress if required or they will reject the complaint

By law they must then allow you to take your complaint to the Financial Ombudsman

You will have 6 months from the date that the firm issued its ‘final’ decision to place the matter before the Financial Ombudsman

Your case will hopefully be settled by an assessor who will try to reach a conclusion that you (and the company) find acceptable. The findings of the Financial Ombudsman are binding on the company you are complaining about.

If you are unsatisfied with the assessor’s findings you can ask to have the complaint referred to an Ombudsman who will finally decide on a case.

All of this service is entirely free and proven to be impartial. You will get just as fair a hearing whether you submit the complaint, or the claims management company does so on your behalf.