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FCA alerts Sipp providers over unregulated introducer warning

FCA alerts Sipp providers over unregulated introducer warning

The Financial Conduct Authority (FCA) has issued a warning alert to Sipp providers over accepting business from introducers.

Last week the FCA released an alert on its website around how unauthorised introducers are influencing advisers to switch clients’ pensions into high risk products.

Following this the regulator contacted the Association of Member Directed Pension Schemes’ (Amps), an industry body for Sipp providers, to draw attention to its warning. 

The FCA said: ‘We have issued an alert to highlight some of the risks arising from authorised firms accepting business from unauthorised introducers/lead generators and/or other authorised firms (the introducer).

‘An authorised firm which accepts business from an introducer must meet its regulatory requirements. If customers are given unsuitable advice by an introducer, the authorised firm may be held responsible for this and subject to regulatory action.’

Amps chairman Neil MacGillivray (pictured) said the language used by the FCA could mean it is looking to include Sipp providers in its clampdown on the role of introducers.

‘If you read the alert then it’s quite open, and you can’t just assume it’s purely advisers; it does refer to regulated firms and that could be quite wide,’ MacGillivray, who is also head technical support at James Hay, said.

When asked, MacGillivray said he felt that ‘there is no doubt’ the FCA could hold Sipp providers responsible for accepting business from introducers. However he felt the industry was more awake to the dangers now.

‘I hope the industry has already taken the steps. We can’t be complacent about it [though], because particularly with pension liberation, they adapt things at such a pace and quite often with these arrangements it seems perfectly fine at the time,' he said.

'Hindsight is a great thing as long as you learn from your experiences and I think the Sipp industry is responding well.

Martin Tilley, director of technical services at Dentons, said he thought the FCA implied that Sipp providers should not accept business from unauthorised introducers in its alert.

‘They have come out and said if you are continuing to take business from unauthorised introducers for non-regulated investments then potentially the FCA would be looking at the Sipp providers and they could potentially be liable,’ he said.

‘The alert suggests to me that because the Sipp provider is an authorised firm, then it could be on the hook if they are accepting business from these introducers.’

Claire Trott, head of pensions technical at Talbot and Muir, said Talbot and Muir had previously decided not to accept any business from unauthorised introducers due to the risk involved. 

‘We as Sipp providers need to be there to protect the clients, and by accepting that kind of business then you are accepting the risk that they are not regulated and so not necessarily as qualified to recommend the same things that regulated advisers would be,’ she said.

Andy Leggett, head of business development at Barnett Waddingham, said that providers should now have very high standards about the business they are accepting.

‘Investment due diligence has been in the spotlight for some time,’ he said. ‘The bar should be really high and that is the point providers get their chance to do their bit.’

The FCA declined to comment.

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