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Ascentric Sipp freezes Ucis business following FSA paper

by William Robins on Nov 09, 2012 at 07:55

Ascentric Sipp freezes Ucis business following FSA paper

Wrap Ascentric has put a hold on all new unregulated collective investment schemes (Ucis) being placed in its Sipp, following the Financial Services Authority’s (FSA) recent thematic review into the sector.

In October the regulator published the results of a thematic review into the Sipp market provider, which found an increase in the number of ‘non-standard’ investments held by some Sipp operators and inadequate controls over these investments.

It called on Sipp providers to introduce enhanced procedures for dealing with Ucis, and to review their due diligence processes.

Ascentric chief executive Hugo Thorman (pictured) said that in the wake of the FSA findings, the wrap would not accept any new Ucis business into its own Sipp and was conducting a review into whether it would accept Ucis in the future.

‘We are having a close look at it,’ he said. ‘We looked at the FSA’s paper and what it said about Ucis and decided we needed to stop and work out what was the best way to do this. We do have other Sipps on our platform, so of course it is their choice whether they allow Ucis or not. We don’t know the answer yet. We have to make a judgement.’

Thorman said he was wary of upsetting advisers who had already decided on the suitability of Ucis investments and could feel Ascentric was questioning the quality of their advice, but added that continuing to allow Ucis would mean a significant investment in systems and processes.

Click here for our definitive database on wraps.

45 comments so far. Why not have your say?


Nov 09, 2012 at 08:52

The first of many?

Dont blame them tbh - especially when you see investors trying to sue Hornbuckle Mitchell over the Bentley Leek fiasco.

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Nov 09, 2012 at 09:22

Find SOMEBODY to blame!! When "Joe Public" was promised 10% p.a. (compound) plus 150% capital returned at the end of the deal, he thought he was simply on to a "good thing" (nudge, nudge)

They never told Joe there was any risk. They "guaranteed" it was achievable.

Now Joe is a headless chicken, but still needs somebody to blame and then get shedloads of compensation. Is it any wonder that Ascentric have made this decision?? Others will soon follow, probably within hours rather than weeks.

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Keith Cobby

Nov 09, 2012 at 09:23

Irrespective of how much I had to invest I wouldn't be investing in UCIS.

My view is that UCIS should be handled on an execution only basis, otherwise you have regulated advisers advising on unregulated business.

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Nov 09, 2012 at 09:30

Keith, you are right. Execution only is the only way to do this, with written proof as well. Even better, only allow them to be sold by stockbrokers.

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Alasdair Sampson (FinServ Solicitor)

Nov 09, 2012 at 09:35

Well, I told you so!

You may recall that when the Bentley Leek story broke well over a year ago I added a comment to the blog that, separately from and in addition to pursuing a complaint against the advising IFA (or a claim to the FSCS as it turned out), the disgruntled investor could also raise a complaint against the SIPP provider.

I was immediately embattled by a storm of protest from numerous irate IFAs, and others, challenging my comments on the basis that the SIPPs gave no advice, that an investor could not run simultaneous complaints, and that it just “wasn’t right” that the investor could complain/claim against the SIPP provider.

The discussion ran for a couple of days by the end of which some of these same IFAs were engaging in discussion. Clearly I had given them something to think about.

Clearly my comments gave Hornbuckle Mitchell something to think about too as their compliance director phoned me to ask if I would act for them. Which I declined to do.

You won’t often hear me say this…….but, for once, I think the FSA has got it right.

SIPPs should be held accountable in respect of the investments that they hold. Investors should have a right of claim and complaint against them. Why shouldn’t they? The SIPP trustees owe a fiduciary duty to the SIPP investors who are beneficiaries of the SIPP trust.

Give me one good solid legal regulatory or even moral reason why they should not be.

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Nov 09, 2012 at 09:43

Alasdair Sampson

Why should the SIPP Provider be responsible for advice given to investors by third parties?

A SIPP Provider will review investments based on HMRC legislative requirements in most cases.

A good number of SIPP Providers dont have their own advice arm.

Its about time those who chose to advise on and invest in UCIS / esoteric assets took responsibilty for their actions and stopped trying this scatter gun approach to blame.

A Trustee does have a fidicuary duty to protect members - this is true. But does the Trustee fulfil this requirement when they require members to seek appropriate financial advice from a suitably qualified investor before allowing investment in UCIS / esoteric assets?

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Mr X

Nov 09, 2012 at 09:44

What about those SIPP providers offering investment advice, investing many of thei clients in structured products and syndicated property sipps?? Any comments?

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j p

Nov 09, 2012 at 09:55

This is very difficult as a hard close might be seen as opening the door to compensation claims. It feels like a number of SIPP providers have not had enough knowledge or nous to close down this line of business early enough. The signs if not the formal direction was there for all to see.

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Anthony Smith

Nov 09, 2012 at 09:56

@ Keith Hobby and @ Hicky - Beware: The rules on promoting UCIS applies equally to execution only business. The FSA will not accept this as an excuse as if you facilitate execution only business you must only do so to clients who meet the narrow criteria for UCIS business. If you have no fact find data that proves they are in the sophisticated client category with evidence of assets etc you will be caught in breach of the rules.

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Nov 09, 2012 at 10:04

"SELF Invested" obviously never meant "SELF responsible"

Well said Alasdair, > > I remember the thread well. As a consequence, I was involved with a senior Citywire staff member and a nationally known MP (and minster), bringing this very matter to the Government minister responsible.

That was sent by him to Mark Hoban who decided to take no action. I have seen correspondence as has that Citywire staff member to whom it was shown.

Mark Hoban reminds me of a waste of oxygen.

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Paul Crutchley

Nov 09, 2012 at 10:04


interesting legal argument. There are provisions in the relevant legislation that allow SIPP providers to contract out of their fiduciary duties (I know, it amazes me too). There are also (in relation to any claim in court) causation problems with a claim against a SIPP, especially if another adviser is involved, and probably if not.

We know that FOS don't necessarily take a pro-regulated firm view though - so you never know.

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Alasdair Sampson (FinServ Solicitor)

Nov 09, 2012 at 10:14

A SIPP trustee has a fiduciary duty to protect its members. So, we’re agreed on that.

A fiduciary duty may briefly be defined as:

“A legal obligation of one party to act in the best interest of another. The obligated party is typically a fiduciary, that is, someone entrusted with the care of money or property. Also called fiduciary obligation.”

A fiduciary duty is seen as being of a much higher and more onerous duty than the mere duty of care.

Anyone disagree with that?

We all know, or you should know, what is an UCIS and what the statutory rules are on promotion of UCIS.

But what are “esoteric” investments? A quick glance at the FSA Handbook gives no definition of that in the Glossary.

Esoteric means, in general terms, “something understood by or meant for only the select few who have special knowledge”

Anyone disagree with that?

So to answer PensionMan’s question: Does the Trustee fulfil this requirement by requiring members to seek financial advice from a suitably qualified investor before allowing investment in ”UCIS/esoteric assets”?

Actually, I think the answer is No.

And I say that because the SIPP trustee owes a duty to his client higher than the simple duty care of of giving suitable advice. His duty is to protect his member’s money and I genuinely do not think that by relying on an adviser’s lesser duty of care in relation to the client’s money, and in particular in relation to UCIS or “esoteric” investments, the trustee could possibly be discharging his higher duty to the client.

But, hey,t that’s just my opinion.

So it’s time to test it.

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James Clancy

Nov 09, 2012 at 10:17


There is some one to blame!!


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Nov 09, 2012 at 10:25

Alastair Sampson

Thanks for your response.

I really hope you are not right though as if you are this will turn the SIPP industry on its head.

Whatever happened to personal responsibility?

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Nov 09, 2012 at 10:26

Alasdair, does the fact members of Hornbuckle SIPPs are also trustees of their SIPP change anything?

I haven't the foggiest about all of the legal ramifications, but it really doesn't seem right that the SIPP trustees also have to assess the quality of an investment. If these guys eventually win in their claim against Hornbuckle, could this not open the floodgates for similar claims in respect of other investments, even regulated vehicles like Arch Cru?

Back to Ascentric, you can't blame them. I'd imagine other providers are considering similar, or making sure clients sign watertight disclaimers if they want to invest in UCIS.

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Nov 09, 2012 at 11:03

Interesting stuff this. I understand that an awful lot of UCIS funds have also been sold through Offshore Bonds (where the main reason being that the bond is the investor and is therefore "qualifying"). Is there any thought out there that the offshore bond providers should also have ensured that the underlying investors were suitably qualified to make the investment decisions and may themselves be liable?

I think that this may well become quite "relevant" soon as we see what happens to the £150m Axiom Legal Financing Fund which I understand is currently in a little bit of trouble and was sold quite extensively in the UK.

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Nov 09, 2012 at 11:08

Kev Here

Alasdair - "So it’s time to test it".

This is the point which frustrates most of us in our profession. SIPP providers, FSA, Compliance etc - all have legal departments or some legal to refer too prior to the options been offered.

We as Advisers go through the mill over risk / reward etc with clients - they listen accept etc - we report or communciate.

But when the proverbial hits the fan - up comes the point you made

"so its time to test it".

Claims proceed maybe and likely FSCS or other elements are hit by claims as well and those IFA's or Advisers who have had nothing at all to do with it are hit by the fall out. All because the client does not take responsibility because someone offers them the comment "so its time to test it".

You earn your fees, but were is the common sense.

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Alasdair Sampson (FinServ Solicitor)

Nov 09, 2012 at 11:13

I agree that in any civil litigation claim against a SIPP trustee, the plaintiff/pursuer investor would have to establish that there was a breach of the fiduciary duty, that there was a loss and also the causal link between the two.

A difficult task made more difficult by the intervening advice of the advising IFA and that may well be sufficient to interrupt that link and thereby the SIPP trustee evade liability.

I do not believe, however, that would have anything like the same prominence in an FOS complaint.

The FOS has an enormously wide discretionary power to decide complaints in such manner is it deems £fair and reasonable” in all of the circumstances. In considering this the FOS will take into account the relevant law, regulations, guidance and standards, codes of practices and where appropriate what the FOS considers to have been good industry practice at the time.

In R(IFG Financial Services Ltd) v FOS 2005 and again in R(Heather Moore & Edgecomb Ltd) v FOS 2008 Ld Justice Burnton came to the view that the FOS does not require to make a decision in accordance with (English) law, that if the ombudsman considers that what is fair and reasonable differs from (English) law, or the result that there would be in English law, he is free to make an award in accordance with that view, assuming it to be a reasonable view in all the circumstances.

I insert the “(English)” in brackets because that comment would apply to Scots Law if the client were domiciled in Scotland.

In essence, therefore, the FOS could come to a decision that a court simply could not do.

What that could mean is that the FOS might consider it fair and reasonable to disregard the fact that there had been an adviser involved and hold the SIPP trustee directly and solely responsible on the basis that the SIPP trustee had a duty to its members not as regards the suitability of the advice to invest but on the structure of the investment itself.

And I have very solid ground for arguing that point – I have a complex “class action” complaint in the FOS just now in which a similar issue has arisen. I cannot make other comment on that as it is ongoing and far from over.

I appreciate, of course, that many SIPP investments, such as many in the Bentley Leek debacle, greatly exceed the current FOS limit of £150,000.

But to an investor who has lost their entire life savings, being able to claim a maximum of £150,000 to mitigate some of their loss in environment where they do not face the same legal difficulties as in a court and do not run the risk of court expenses if they lose that may well be well be that one bird that is worth two singing in the bush.

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Nov 09, 2012 at 11:14

@ Kev Here

Totally agree - well said!

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Nov 09, 2012 at 11:33

Just a thought, but if a SIPP trustee decides not to allow a particular investment, contrary to the wishes of the investor and the advice given by the adviser, and that investment becomes profitable, could the SIPP trustee not to be found in breach of their fiduciary duty by not allowing it.

Surely this places SIPP trustees firmly between a rock and a hard place...damned if you do and damned if you don't.

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Smithling via mobile

Nov 09, 2012 at 11:37

Hopefully the ambulance chasers will win their sipp cases and pay back the loans to the Axiom fund so that sipp holders get their money back.

Got to love irony.

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Nick White

Nov 09, 2012 at 12:19

Alasdair: you say

"Well, I told you so! ….. You may recall that when the Bentley Leek story broke well over a year ago I added a comment to the blog that…..the disgruntled investor could also raise a complaint against the SIPP provider….. The discussion ran for a couple of days by the end of which some of these same IFAs were engaging in discussion. Clearly I had given them something to think about…..Clearly my comments gave Hornbuckle Mitchell something to think about too as their compliance director phoned me to ask if I would act for them. Which I declined to do"

This doesn't come across very well. I'm assuming you have Hornbuckle Mitchell's agreement that you may publicly disclose the fact they asked you to act for them, and that you may disclose that you refused, in order to score some kind of PR points ? It's not a marketing strategy that's ever occurred to me, I must say !

You do also know that Hornbuckle successfully defended that case ? And you've read the Pensions Ombudsman's robust decision and studied the wording of the rule in the scheme in that case, that sets the balance of control as between member and operator/trustee on investment decisions ? I'll put up a couple of extracts as a separate post, as this is already turning into War and Peace.

On to the central point. You say "... the SIPP trustee owes a duty to his client higher than the simple duty care of of giving suitable advice. His duty is to protect his member’s money and I genuinely do not think that by relying on an adviser’s lesser duty of care in relation to the client’s money, and in particular in relation to UCIS or “esoteric” investments, the trustee could possibly be discharging his higher duty to the client."

You seem to be going further than the FSA is, even in its latest thinking. You seem to be suggesting that SIPP operators should be responsible to members for the performance of the investments, as they might be if they were trustees of a traditional large occupational pension scheme.

There's certainly a strong case for saying SIPP operators should owe a basic duty to understand the structure of the investment and to ensure that they have the skills and financial resources to administer the investment competently, and certainly the FSA thinks so, but are you actually saying that they should only be in the business of operating a SIPP if they are also expert investment advisers, expert enough to owe a greater duty of care on investment than the adviser who actually recommends the investment to the member, the adviser whose duty of care you say is "lesser" ?

The reason the SIPP sector came into existence was to allow an individual saver to unbundle (i) administration from (ii) advice. Any attempt to impose a broad duty of care re investment on SIPP operators is inconsistent with this, and with the FSA principle of good regulation which requires it to recognise "The desirability of facilitating innovation in connection with regulated activities".

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Nick White

Nov 09, 2012 at 12:23

Key extracts from the Holy/Hornbuckle Ombudsman decision (this is a public document: see http://www.pensions-ombudsman.org.uk/determinations/docs/2012/oct/88822.doc):

"47. Furthermore, it is important to understand where responsibility lies within the relationship between the IFA and the SIPP provider. SIPP providers can offer guidance, help and support when looking at particular investments, especially those of a more esoteric nature, but the responsibility for ensuring that the investment is appropriate and suitable lies with to [sic] the IFA.

49. ….Whether such esoteric investment ideas involving property may be considered suitable for a SIPP is up to the investor. If he/she has an IFA (such as Mr Holy) and things go wrong, in my view, the IFA should be taking full liability.

50. Mr Holy has however clearly signed an agreement setting out the level of personal responsibility which he has taken on….he had declared to HMGL/HMTL that he fully understood and agreed that…. he had read the Trust Deed and Rules and agreed to be bound by the provisions in them.

In my view, the Trust Deed and Rules (as subsequently amended) made it clear to Mr Holy that HMTL had to follow his investment instructions unless, in the opinion of HMGL, by doing so HMRC rules would be breached."

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R. Munron

Nov 09, 2012 at 12:42

Re comment from Anthony Smith re XO business. Of course if the adviser is promoting the UCIS it is not really XO business. On the other hand, if he does not promote or advise on the investment - ie the client insists on selecting the investment without a recommendation and he merely arranges the investment, then In this case he would be subject to the Appropriateness rules in Chapter 10 of COBS but only if he is a MiFID adviser.

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Mike Morley

Nov 09, 2012 at 12:56

It does seem disingenuous to endow SIPP Trustees where in effect the settlor and the beneficiary can only ever be one and the same person or possibly a dependant with the normal trustee responsibility. Think of a SIPP used to purchase a commercial property that will for a period be the scheme's main asset - is the the SIPP provider to ban this on grounds of lack of diversification?

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yellow army

Nov 09, 2012 at 12:58

dave - can you elaborate a bit more on what's happened to axiom? they pitched the fund to us recently. i personally didn't like it so binned it, it but would be interested to hear what's happening...

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Nov 09, 2012 at 13:09

Yellow Army

Here you go:


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Nov 09, 2012 at 13:31

@ Alasdair

Once again you are seeing things through your business eyes only.

When someone suffers losses through poor advice, your business is to sell your services to the sufferers.

Your first call could be to get a list of the sufferers and ask them for money so they can be a part of a class action.

If the investment is nearly worthless, you know there is no prospect of being paid or obtaining money for your clients from the investment. So you then know that the next stage is to have a go at the adviser or their insurers, (perhaps for an additional fee), as this is no longer a class action.

If the adviser is in administration (fairly likely) this can prove difficult, so you then look for someone else who may have money, in this case the SIPP provider. you then may look up a few regulations and attempt to make a case ( possably for an additional fee) so you can earn from them.

And so it goes on.

Why not let the FOS or the FSCS deal with these cases?

What percentage in addition to your stage payment fees to you want to take from your clients compensation money?

From your prior comments on this site, you appear to be one of the cleverclogs who don't care about the advisory industry and it's long term future. You are more concerned about yourself and your income, arguing silly points, just to make a case for your clients to cough up more.

If your business was to criminally prosecute miscreants and send them to jail, I may have some respect for your views.

As it is you and a lot of your fellow lawyers are no better than the ambulance chasers who phone us all up, all the time, to claim on a nonexistant PPI policy.

What is the difference between a leech and a lawyer? The leech stops sucking you dry after you're dead.

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Alasdair Sampson (FinServ Solicitor)

Nov 09, 2012 at 15:02

Clearly I need to speak defend my corner!

So…… IFAs and SIPP trustees don’t like my views. Nothing new there then.

But I bet they make you think –which is what they are aimed to do. And if they don’t make you think, they damn well should.

Just before anyone starts to scoff and choke in indignation – please bear in mind that it was I who tried to set up the IFA Defence Union(note the word “Defence”!) in 2005. IFADU didn’t work because you IFAs were too busy bitching with each other to support each other.

Why did I even suggest that it was needed? Because I was appalled at the raw deal IFAs got in this regulatory system. Which is why almost all of my professional time is spent working for IFAs in defending them against FOS complaints, against FSA supervision and investigation proceedings.

Yup, I know some of you think I am an ambulance chaser. That’s your problem.

But for the record, the claims work I do does not include PPI or anything like it, only complex investments and/or group actions.

Why don’t I just let FOS and FSCS deal with them?

Well, in some cases the investments and the grounds of claim are such that I have doubts that the assessors understand what it is they are dealing with. And in most cases, if the client could not understand the investment (if they did understand it why would they need an IFA?) how the hell are they going to understand what went wrong and how are they going to put together a complaint or claim against a respondent bank or platform or SIPP who can afford the big league legal firms to defend them?

Also for the record, every single investor who I act for in pursuing complaints to FOS or to FSCS has been referred to me by an IFA. I don’t take instructions unless an IFA has looked at it first.

I read with interest comments above that the client, instead of taking responsibility, is only looking for someone to blame. Anyone will do, so long as they have a deep pocket.

Why should the client be solely responsible? If that was so then why would they have needed an IFA, whom they paid handsomely by commission and/or fees, to advise them in the first place?

Over the last 12 years I have read many 100s of IFA’s files of all types – some so bad I wonder how the adviser was not in jail. From all of the stuff I have read, it is clear that most clients don’t have the necessary experience to make any investment decisions or decisions about specific investments. Which is why they need an adviser who does have the experience to guide them. In most cases the client must rely on the adviser, he has no option.

So remind why it is the client who has to take sole responsibility?

I know my opinions may rankle – but that is because some of you don’t want to hear what my experience has taught me.

I commented 15 months ago about SIPPs being targets for complaints and was scoffed at. And where are we now? What do you think the purpose and effect of the FSA’s thematic review report will be?

If experience teaches me how the complaints and claims systems work, which it does, then that enables me to advise IFAs to protect themselves as best they can and to act for their clients where the IFA feels they have been badly advised.

Which is precisely why my IFA clients retain me.

But don’t mind me, please feel free to bury your head in the sand……

Incidentally, Hickky, please ensure you pay the copyright fee on the joke to avoid a lawyer’s letter.

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Nov 09, 2012 at 15:15

@ Alasdair Sampson

Reading your last post it seems you recognise that a client will get advice from an IFA as opposed to a SIPP Provider.

Have I read this right?

If so on what grounds do you think it right that clients should seek recourse from a SIPP Provider when things go wrong?

For the record I have no doubt they will - I just think its unfair and costly for the SIPP Provider.

I do not belive the client has sole responsibility where they have been advised by a suitably qualified and regulated IFA but if they have made the decison themselves and it turns out to be a duff investment why should anyone else shoulder the blame?

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Wake Up and smell the coffee via mobile

Nov 09, 2012 at 16:05

Stop gloating and trying to play judge, jury & executioner.. UCIS have and alway will have a place. You ALL need to work out where you income will come from post RDR when your savings run out.. I am sure each and everyone of you is whiter than white when you made your Sales ( sorry i meant advice) to your trusting clients. Which no doubt most of you will be binning as they are not rich enough..

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Alasdair Sampson (FinServ Solicitor)

Nov 09, 2012 at 16:19

@ PensionMan

Please do be assured that I am well aware that an investor gets advice from an IFA before investing in an investment within a SIPP and that he doesn’t get advice from the SIPP

I have never said or implied otherwise.

If the investment is not suitable for the client then clearly he has a right of complaint/claim against the adviser on the grounds of suitability.

You ask why if the client has been advised by a suitably qualified and regulated IFA but if they have made the decision themselves and it turns out to be a duff investment why should anyone else shoulder the blame?

A perfectly reasonable question on then face it and one that is repeated in all of these blogs.

But it entirely misses the crux of the matter – what was the quality of the advice? Was the advice good advice or bad advice?

I have never been under any illusion that the client should complaint to the SIPP about the advice. I do not think I have ever said that or even vaguely implied it.

I reiterate what I said 14 months ago (not 15) at the time the Bentley Leek story appeared - there is nothing to stop the client running two complaints against different respondents on different grounds.

The complaint against the adviser would be on suitability, and the complaint against the SIPP would be on alleged breach of fiduciary duty.

I never said the complaint against the SIPP would be easy or would succeed but simply that, in my view, the law and the rules would allow him to make a complaint/claim.

I am also aware that the Pensions Ombudsman rejected the Bentley Leek complaint and why.

Were I now acting for a SIPP provider in defending a complaint before the FOS I would be relying on the decision of the Pension Ombudsman.

If I were acting for a SIPP investor in a complaint against a SIPP I would be relying on the FSA thematic report.

Sorry if you don’t like to hear that, but it’s as plain as the nose on your face.

Forewarned is forearmed.

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Nov 09, 2012 at 16:37

Kev Here

Ok Alasdair - your make some quite relevant points

But my concern (and especially from my experience of the legal profession) was linked to your comment - "so its time to test it" - like someone is pushing the door open so it comes to a point were someone who has a test case to work from can then boot the door in.

Yes you have seen files - and I agree so have I - they are scarey sometimes or someone has just not made sure info is collected and recorded properly.

But the point I was making is clear - if the client comes for advice - its is given/discussed completely/risks covered/recorded/reiterated (even if that report has a signature) - then the thing goes tits up - the client cry's wolf and we are the bad guys as usual.

Then we are punished - if the caps fits fine - but I think what frustrates many IFA's and you made the point - regulation and the fact if those who do cannot be punished we all suffer the fall out.

Because of the system we are easy to attack - try complaining about the work done by the Legal Profession.

My request is just for someone to adopt some common sense and not just do something to test the waters to see - if you are saying you are not doing this then thank you - but it does not read that way.

Final point - I agree as a profession we do not work well togather and we should - there is less of us than there are Accountants or Solicitors as an example and highly likely to be less of us soon. There are enough clients to go around

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Alasdair Sampson (FinServ Solicitor)

Nov 09, 2012 at 17:48

@ Kev Here

Sorry to disillusion you, but that’s precisely what I mean.

Please don’t think my comments are or have been targeted against embattled IFAs, they aren’t.

As any trustee owes a fiduciary duty to the trust beneficiary then clearly the beneficiary has a right to enforce that duty and to take action if that duty is breached. That’s just the law. It’s nothing new.

It’s exactly the same with a SIPP. That is just another form of trust and the law applies equally to a SIPP.

I can tell you that as a matter of law and regulation the SIPP investor already has an entitlement to make a complaint to FOS under the FSMA 2000 against a SIPP trustee in respect of a failed investment included in the SIPP. But so far as I know, no-one has done so. I can see no reason why the investor should not be able to so.

Whether or not the FOS would uphold a complaint against a SIPP trustee and award redress is quite a different matter. Given the number of SIPP investments that have gone down I believe that it is time to test whether FOS agrees or disagrees that the SIPP beneficiary is entitled to redress from the SIPP trustee.

Why should the SIPP trustee be exempt from complaints/claims? He accepted the investment in the SIPP so, in response to Nick White, Yes I do think they need to have expertise in respect of the investments they accept and Yes I do think they have a duty in that regard which is a fiduciary duty which, by definition, is higher the adviser’s duty of care to give suitable advice.

The SIPP trustee gets paid as does the IFA so he should be held accountable for what he does. Everyone else is.

You comment on the difficulty about making a claim or complaint about a lawyer or accountant. I cannot speak for accountants or for lawyers in England, but here in Scotland any person, client or not, can make a complaint against any lawyer directly to the Scottish Legal Complaints Commission which is based on the FOS.

However, Kev, you are confusing what I am saying about SIPP trustees with the position and role of the adviser as are so many of the contributors above.

I wholly agree that if the client was properly advised, and that means that the process of giving the advice was correct as well, and if the IFA’s file is maintained in a manner that shows he was properly advised then in a Utopian fair sane and balanced world any complaint should be rejected.

But you don’t work in Utopia, you all work in financial services. You all know the rules or should do.

I keep saying to IFAs that what is absolutely essential is not so much that the advice and the process were correct but that the file shows they were correct.

It is simply this – from the IFA’s perspective, both in FOS complaints and in FSA investigations, if it isn’t written down then it simply didn’t happen.

That, however, is straying from the topic of the article and this thread.

SIPPs are vulnerable to complaints.

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Nov 10, 2012 at 19:04

Surely if people are not allowed to invest into UCIS through a SIPP provider, then the SIPP provider cannot allow existing invetors to hold UCIS holdings and must request they sell out or move the SIPP to another provider.

If you no longer allow something it surely should be across the board... and investors should be treated the same.

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Arthur Schopenhauer

Nov 11, 2012 at 08:38

@Alasdair Sampson

Sanity thank you

Surely the point is already covered in the existing regulations UCIS are in the main to be promoted for limited classes of investor, NOT to what is now spoken of as RETAIL investors

If correctly promoted the investor gives up the right for compensation on advice relating to the product in most cases

The ignorance starts with the IFA who either does not read the rules or deliberately flouts them

What I would like to see is redress when the self certified investor lies to FOS to gain a selfish advantage. Dealing with this is time consuming and damaging to the business of the adviser. If the investor gets away with the vexatious complaint then there is a fraud on the IFA practice OR the FSCS and those that fund it

I would for one support such an action group Alasdair.

There is nothing wrong with the majority of UCIS and it is a poorer place where only the large institutions can be providers. There are also contradictions is a SEIS a UCIS? or an EIS

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Arthur Schopenhauer

Nov 11, 2012 at 08:46

@ Alasdair

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Nick White

Nov 11, 2012 at 16:31


Alasdair is north of the border: try


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Alasdair Sampson (FinServ Solicitor)

Nov 11, 2012 at 17:12

@ Arthur

As Nick has indicated I am a Scots lawyer registered with and regulated by the Law Society of Scotland.

I am not authorised to give advice on matters pertaining to English law or litigation and do not do so.

I do advise clients all over the UK under FSMA 2000 as amended and under the FSA rules as they are UK wide.

Whether that will remain the case if Scotland votes for independence I do not know. Just for the record, whilst I would dearly love Scotland beat the Auld Enemy to win the Calcutta Cup more than once every decade or so, the Union Flag looks fine to me just the way it is.

I certainly cannot disagree with your comments about the vexatious complaint.

I have defended many for IFAs where it is clear the client’s memory is very selective or where the evidence offered, and this tends to be the verbal evidence, is simply factually wrong and it cannot be otherwise than deliberately so.

I defended one complaint where the complainant confirmed that the IFA had issued a detailed suitability report which he stated in his complaint “…was so long that it would have taken him a week to read it”. Despite insistence from me the FOS would not specifically press the complainant to say whether or not he had read it – but FOS simply took the view that it we unreasonable to issue a report of that length as the client would have got tired before reading to the end of it. Howq do you defend against that?

Where you have a system in which there is no sanction of costs to prevent a complainant bringing a vexatious complaint, and no sanction of perjury to prevent complainants being economical with the truth then I am afraid that these types of complaints will arise.

That said, I also agree from the many cases that I have dealt with many IFAs just do not know of and/or do not understand the UCIS rules, and complaints are entirely justified.

In one case a couple of years ago defending an IFA in an FSA investigation, my heart sank as I walked into his building for my first meeting with him because at the front door were placard promotions of UCIS which were replicated in his waiting room. When I asked the IFA what he understood by the Section 238 restriction he answered “What do you mean?”.

It’s at moments like these that I wonder why I do what I do.

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Arthur Schopenhauer

Nov 11, 2012 at 17:18

Mr Alasdair Colin Sampson

Financial Services Advocacy Ltd

28 Brown Street


E: alasdair@sampson-law.com

P: 01560 322191

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Nick White

Nov 11, 2012 at 17:31

Alasdair - please can you define what you believe to be the extent of the legal duty of care of a SIPP operator to a member in a scenario like the Holy / Hornbuckle case, i.e:

- UK registered SIPP, operating under English law, English member;

- rules of scheme say investments to be made as member directs, with operator able to refuse only where would be breach of rules of scheme/ trigger unauthorised payment or similar/ outside generic restrictions on classes of investment set out by operator;

- member directs operator to invest his fund in something that is within the permitted classes of investment, on the advice of a supposedly expert 3rd party;

- investment goes pear-shaped, allegedly due to financial mismanagement.

Do you believe the Holy case was wrongly decided by the Ombudsman ? That it is not possible to structure a UK registered pension scheme under trust, in such a way that the central trustee/operator of the scheme is not liable for the unsuitability or poor performance of the investments selected by the member ?

To say that "a trustee owes a fiduciary duty to the member" is accurate enough, but that is only the beginning.

The most fundamental duty of a trustee, as someone much cleverer than me pointed out in an APL lecture many years ago, is not to act in the best financial interests of a beneficiary as such. Rather, the most fundamental duty is to act in accordance with the provisions of the trust. A trustee may not generally act "ultra vires" i.e. outside the powers given to him by the trust.

So, in a SIPP whose rules give the member the power to direct how to invest his funds, it is consistent with the most fundamental duty of the trustee to act on the member's investment instructions. It is not for the trustee in that case to say "sounds a bit risky". What if the member, or his IFA, did have better judgment than the operator and the investment turned out to perform well, but the operator had refused the investment ? I am sure the member would be quick to say the operator was in breach of trust and liable for the loss of opportunity. After all, if he had wanted someone other than himself or his IFA to decide what he should and shouldn't invest in, why would he have joined a SIPP ?

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Arthur Schopenhauer

Nov 11, 2012 at 17:32

@Alasdair Sampson

Thank you

A colleague of mine spotted irregularities by the manager of a fund (FRICS) reported the money laundering aspects which the host firm chose to ignore then the FRICS subject made a complaint against the IFA concerned which finished up being thrown out by FOS

The IFA has taken nearly 2.5 years away from his main advice job and fought over 30 cases in the Courts had the FRICS no arrested in the jurisdiction where the money went into the wrong pocket and still had no help in the UK from the police the tax authorities or the old firm of IFA's from which he resigned in disgust

It seem that we have rules with no definitions of the terms and far from being a level playing field if you follow the money it favours large institutions and the robbing of the masses. FInes are just the cost of doing business for the large institutions financed by the shareholders and the tax payers

When a society loses faith in its politicians and its institutions it could be a long hard road back

When do the English have the vote on Scotland leaving the UK??

When will the Greek Finance minister take over the negotiations on the European Commission Budget??

I hope Scotland stays in the argument is only made to sound sensible with the eloquence of Alex Salmond all other analysis says it is a silly idea

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Alasdair Sampson (FinServ Solicitor)

Nov 11, 2012 at 18:18

@ Arthur

Where to start?

By the looks of it, I had thought the Greek Finance Minister WAS running the EU budget negotiations…..they seem to be about as well organised as the Greek economy.

I disagree that many if any argument put up Mr Salmond are sensible. He is of course the most astute and wilely politician in UK – and I use a small “p” in politician deliberately. But he is not, in my view, a statesman or a diplomat.

His arguments that after independence Scotland would remain in a sterling zone or would automatically be a member of the EU are respectively economic nonsense and legal nonsense.

When will then English get the vote on Scotland? That I cannot say….….but you need to ask Tony Blair and Gordon Brown why, when they were drafting the Scotland Bill in 1996, did they not include a provision that Scots MPs could not vote on purely English matters - the “West Lothian Question” – as it make no logical sense that they should. It makes perfect political sense that they do if you happen to be a Labour Prime Minister, but that doesn’t make it right.

I can understand why IFAs have lost faith in the regulatory system they work under. I have tried to explain this system to lawyers who have not encountered it before – their usual reaction is that I have taken leave of my senses. To lawyers who operate in an environment where the law rules, where old fashioned notions of sufficiency of evidence, of credibility and the objective tests of the law are applied, the whole regulatory regime of the FSA is anathema.

@ Nick White

You will appreciate that I cannot give a case specific opinion because I do not know the specifics of the case.

The issues considered by the pension ombudsman may very well be different to the issues considered, and the view taken on those issues, by the FOS.

Each case will depend on the terms of the scheme, on the investment and the forum in which the complaint is being argued.

I do not disagree that the fundamental duty of the trustee is to implement the scheme within the terms of the trust so that it is intra vires, but there is always the overarching fiduciary duty to the beneficiary.

You may well be right in what you say, and I am sure that a SIPP operator defending a complaint will argue as you have argued.

The point I made and believe I am correct to make is that a SIPP investor should have and does have a right of complaint to the FOS against a SIPP. How each complaint would fare would depend on its merits and how it was argued.

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Mrs C

Nov 12, 2012 at 11:21

Alasdair Sampson’s attempt to drum up business for himself has distracted us from the point of the article.

Ascentric are no longer accepting UCIS because of the reputational risks of accepting business that has a higher than average failure rate. Although the FSA’s move to restrict the promotion of UCIS makes sense, there is still a market for UCISs. It would be a crying shame if SIPP operators stopped accepting this business because they are too scared of investors blaming them when things don’t pan out as expected.

A true offers flexible investment options and SIPP Trustees have an obligation to follow member instructions, unless doing so would breach HMRC rules. UCIS are ‘SIPPable’ but the key is to ensure that toxic investments don’t flourish. Investors choosing UCIS for a part of their investment portfolio need a financial adviser who can help make informed investment decisions. Financial advisers need assurance from SIPP operators that they will undertake appropriate due diligence and identify any adverse trends that individual advisers are not able to pick up on.

At the end of the day investors seem to be in a win, win situation. They can take a punt on a high risk investment knowing that if it doesn’t perform as promised they will claim miss-selling and expect to be compensated. If their adviser can’t, or won’t, pay out they’ll look to the SIPP operator, believing that they have the deepest pockets.

As a SIPP market we need to work together to ensure the right outcomes for investors and that includes giving them the opportunity to take risks.

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Alasdair Sampson (FinServ Solicitor)

Nov 12, 2012 at 14:23

@ Mrs C


You really should read more carefully what I have said.

I reiterate – I do not pursue complaints against FSA authorised firms except where an IFA refers the client to me in the first place. If I was seeking to drum up claims business, then a journal read by the potential respondents would hardly be fertile ground.

I do not think that I have in any way distracted readers from the point of the article – in fact, quite the reverse.

So what was the point of the article?

You say that Ascentric:

“are no longer accepting UCIS because of the reputational risks of accepting business that has a higher than average failure rate.”

With respect, the article makes no such comment. Do you know something the author of the article did not?

The apparent point of the article can be ascertained from what the article actually said: that Ascentric has put a hold on all new UCIS being placed in its SIPP following the FSA’s recent thematic review, that it was conducting a review into whether it would accept UCIS in the future and that they decided they needed to stop and work out what was the best way “to do this”.

Whether that means seeking the best way to stop accepting UCIS or the best way to continue doing so isn’t clear.

I don’t see any reference to Ascentric taking that decision for reputational reasons. That, of course, would be an entirely different matter. And if you are correct then that may indicate the real point of the article – and it is interesting that it takes a blog thread like this to tease that out.

For “reputational risks” do you mean risks of consumer complaints?

And the point of my comments? Precisely as I argued 14 months ago, and was shot down in flames then, that SIPPS are vulnerable to complaints and when the complaints are made to FOS they could be particularly vulnerable.

There are, in my view, some learned and well argued comment in this thread seeking to make the opposite case to me. Would that have been considered and argued had I not raised the issue?

Am I correct? I don’t know but all I am saying is that the risks of complaint exist for SIPPs. If you are made aware of a risk then you need to manage and mitigate it.

You may not like what I say, but you have been thinking about it.

And that was not the obvious point of the article.

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