FINANCIAL MIS-SELLING AND SIPPS,
EVERYTHING YOU NEED TO KNOW
Nowadays, the number of investment schemes are endless. Pension investment schemes are becoming more and more popular – for both investors and scammers.
Placing your pension fund into an investment opportunity is known as a SIPP, or Self-Invested Personal Pension, and first emerged in the UK in 1990. This new and exciting income generator paved the way for budding investors who deposited some or all of their pension fund into an investment scheme with promises of high-returns.
But what happens when this doesn’t go to plan? Thousands of people have already fell victim to poor financial advice, losing not only their promised profit, but their original investment amount, too.
SIPPS were marketed as an easy income generator. Many investors were lured by lucrative promises offered by financial advisors, ensuring that in a matter of years their customers’ investment would accumulate a hefty profit. It is easy to see how people were so easily led down an unsecure path they had no knowledge of. Advisors often marketed their money-making schemes as an opportunity to increase your pension fund, or even retire early, something which is normally only achievable for few.
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Suddenly the prospect of an early retirement became an achievable milestone for a huge number of everyday people. Everyday people who had little knowledge of the investment market and little or no previous experience. Many customers who took out SIPPs were one or more of the following:
- not aware of the financial risks
- given poor financial advice
- not given all the information required
As a result, thousands of people ended up with something that wasn’t suitable for them. Many of these investment schemes collapsed or suffered in a wavering market, meaning not only did a huge amount of people lose their promised returns, they also lost their full investment amount. Some victims have lost upwards of £100,000 with no hope of seeing their money returned to them.
The Financial Conduct Authority (FCA) regulates financial services within the UK and are responsible for protecting consumers both before and after making any financial decisions. The FCA advises that all individuals contemplating entering into an investment should be
- A high-net investor earning over £100,000 per annum
- A sophisticated investor with lots of experience and a good understanding of the market.
Unfortunately, many of those who entered a SIPP did not meet this criteria. These individuals entered their SIPPs unaware of the risks involved and ignorant to the volatile market.
The majority of individuals enter a SIPP through contact with an advisor or an introducer.
The role of a financial advisor is to help people find the best investment opportunity for them. However, many advisors fail to deliver on their promises, offering huge returns on investments they know are not suitable for their customers. Of course, everyone knows that all investments carry a degree of risk, but the job of a financial advisor is to minimise that risk as much as possible. Many advisors target ordinary individuals who have a limited understanding of the market and the risks involved, and they do so with the help of an introducer.
And introducer is a marketing firm employed by an investment advisor. Introducers generate customers via cold-calling and pass the details onto the advisor they are employed by. These firms are completely unregulated, and do not have to adhere to FCA regulations, which makes you much more vulnerable, and much less protected should anything go wrong with your investment.
When deciding to take out an investment, it is recommended that you meet the FCA-recommended criteria as outline above. If not, ensure that you have conducted thorough research before making any decisions.
Fortunately, in recent years, individuals are becoming more and more wary of pension scams and are more reluctant to release their retirement fund to a cold-caller. If you were mis-sold a financial product by an investment advisor or another financial company, you may be entitled to compensation. Claiming can be a lengthy process, so contact a member of our team today to learn more about how we can help win your case. Our knowledgeable, dedicated team have a 100% success rate to date along with a no win, no fee payment agreement.