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IFA secures clarification from FSCS over Sipp deposit cover

by Brian Cantwell on Feb 20, 2013 at 09:52

IFA secures clarification from FSCS over Sipp deposit cover

The FSCS has clarified that cash held in Sipp deposit accounts will be covered by the scheme up to £85,000, following a campaign from Nottingham-based IFA Investment Sense.

The firm appealed to the scheme for clearer guidance in November 2012 after a client complained that the FSCS website was unclear.

The FSCS said Sipp deposits were covered by the scheme, as long as the deposit taking institution had an FSA approved UK banking licence, and the Sipp investor did not hold additional personal savings with the same deposit taker that would cumulatively exceed the £85,000 limit.

Phillip Bray, marketing manager at Investment Sense, said: ‘People were asking us about the FSCS coverage and wanted to know whether the accounts they were investing in were covered by the FSCS in the event that a bank or building society went pop.’

‘We looked at the FSCS website and it didn’t mention anything about Sipp deposit accounts, although it does mention personal accounts and accounts in trust’

‘I’m led to believe that Association of Member-Directed Pension Schemes got clarification from the FSCS during the credit crunch, 2007-8, but I’ve not seen anything recently.’

11 comments so far. Why not have your say?

Xiang Xhi

Feb 20, 2013 at 10:32

I once wondered about this. I made a phone carr and received a response within 30 seconds.

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Greg M

Feb 20, 2013 at 11:05

Xiang - I wondered too, took just one quick phone call to find out. But then, I've learnt this isn't so much a news site as it is a posting board for self publisists' press releases.

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Knowledgable insider

Feb 20, 2013 at 12:06

Well the clue is in the fact that he's a 'marketing manager' so free publicity is what he is after

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C hancock

Feb 20, 2013 at 12:21

Well said. I checked their website and found the answer. And it is a deposit so the limit is clear when a bank goes pop. Well at least their marketing manager isn't cold calling us....

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Phillip Bray

Feb 20, 2013 at 12:55

Hi guys

Thanks for the comments, I thought I should write a quick note to respond.

@chancock could you please post the link to the section of the FSCS website which deals with deposit accounts in SIPPs

Also, I can assure you we have no need to cold call anyone.

@knowleagable insider, too right I am! ;-)

The feedback I've had on this from other IFAs and investors has been more positive. They too have found it hard to get this information in writing from the FSCS, indeed it took us two months to get the FSCS to confirm in writing that deposit accounts in SIPPs were protected. Furthermore the FSCS conceded in comments to FT Money, when they covered this story, that this information was "not easily visable" on their website and this is something they plan to address, which has to be a good thing.

Phil

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Huntiams

Feb 20, 2013 at 13:37

Does anyone understand the protection for cash deposits under a Personal Pension. For example Transact allow fixed term deposits to be held under a Personal Pension or a SIPP. I'm led to believe that protection differs?

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Captain Runaway

Feb 20, 2013 at 16:32

New Model Adviser- The Daily Mail of financial reporting

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Tim via mobile

Feb 20, 2013 at 23:03

Poor article as its clear to any decent adviser these are protected

All a marketing spin, same when he ran four counties

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Dathan Steele

Feb 21, 2013 at 07:03

@ Huntiams. My understanding is that that the only pension wrapper to allow cash deposits to be held is a SIPP. The Transact pension wrapper is a SIPP, so no issues there. However, a PP? A PP has to hold either internal pension funds, or 'mirror' pension funds (i.e. the assets are held on the balance sheet of the Life Co), so that the policyholder owns a contract of insurance (the pension) and does not own the underlying assets. So, the only way of holding 'cash' in a PP is via some form a money market pension fund which might hold CDs but is most certainly not cash on deposit....it is a 'fund'.

One thing to point out is that just because you have something in writing from the FSCS does not necessarily mean it is correct, or that it can be used to compel a case handler to review a case in the same way. I've had some stuff from them in writing that me and my tame SIPP trustee simply laughed at.

How likely is it that a SIPP would go bust? Life Co hybrids not likely, and anyway the regulator would get a troubled life co taken over, so potentially no issues there. Proper real SIPP trustees do it well, and are well capitalised. The issues are really around the 'two men and a dog' SIPP operations, who don't actually know what they are doing. FSA have finally woken up to this issue, and are trying to address the issues. However, a SIPP guru I know said that if a SIPP failed it would be 'one hell of a mess'.

So, choose carefully. As always, if anything goes wrong its the PBI (advisers) who get it in the neck, so don't use Joe Bloggs and co just because they don't understand the risks of holding a dodgy 'asset' which a proper SIPP trustee would not touch with someone else's bargepole!

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Tim Framp

Feb 21, 2013 at 09:30

@Dathan Steele

Transact's pension offering is a PPP, not a SIPP; at least that was the case when I worked there.

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Dathan Steele

Feb 22, 2013 at 07:05

@Tim

If the pension wrapper holds the actual AUT/Oeics then it has to be a form of SIPP, as life wrappers such as PPP's can't hold a AUTs or Oeics. So, if the firm wants to call this a PPP then I suppose they can, as a SIPP is a personal penion.....Sorry, I don't use Transact so I don't know if they offer a SIPP holding the oeics, and also a PPP (which they would have to offer pension mirrors for), or whether its just one wrapper....

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