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 Bailey also reminded firms of their regulatory commitments in the event of failure, noting: ‘We recognise that if a firm may not be able to meet its financial commitments, it may be in the interests of some of its customers for part or all of its business to be sold to another firm.
‘If your firm does so, we remind you that our Principles for Businesses require your firm to pay due regard to its customers’ interests and treat them fairly. In particular, in pursuing any sale, your firm should pay due regard to its implications for customers who may have compensation claims.’
He continued: ‘We expect all directors, as well as complying with the relevant provisions of the FCA Handbook, to comply with their statutory and non- statutory duties. These include, where a firm is at risk of insolvency, their duties to creditors, such as customers to whom compensation is or may be due.’
Mr Bailey reminded firms they were obliged to communicate in an ‘open and co-operative’ way and disclose to the FCA anything relating to them of which
it would expect notice. He said this includes whether a firm is considering selling all or ‘a significant part’ of it to another business.
SIPP provider Curtis Banks’ group communications director Greg Kingston told Money Marketing: ‘The ruling has clear limitations to this case. But the likely outcome is SIPP providers with significant exposure to unregulated assets will review their due diligence processes.
‘There is an expectation this will accelerate the sale
of SIPP providers or part of their books. Other SIPP providers will anticipate or expect the FCA or HMRC to work with them to manage poor books to good health.’ The Sunday Telegraph saw both bad news and good news for its readers, noting warnings from experts that the changes will lead to higher fees and less choice for experienced investors and ‘leave thousands in limbo as their pension firms are driven into bankruptcy’ before more positively identifying that: ‘In return, all pensioners stand to gain more protection for their savings and safety from the shadiest parts of the pension market.’
Martin Tilley of SIPP provider Dentons told the paper: ‘Experienced and sophisticated investors may be frustrated. The pension market for their investments could shrink significantly and more checks add cost, which
will be passed on to customers. SIPPS were intended to give flexibility and control to the investor, but will now not permit them to invest as they want.’
The Sunday Times thought the story worthy of its news section, going with the somewhat sensational ‘Victims of pension-pot scams to get money back’
It reported that the pension industry was ‘bracing itself for thousands of claims from people mis-sold unconventional investments including burial plots, tree plantations and hotel rooms’.
The paper believes that SIPPs have ‘proved a goldmine for fraudsters and unscrupulous advisers, reporting that three bosses of a company called Ethical Forestry which sold a Costa Rica based investment paid themselves £14m before it collapsed and triggered an investigation by the Serious Fraud Squad.
There is expected to be some ambulance chasing as SIPP providers are required to take more responsibility for the investments that are made into the increasingly popular retirement savings wrapper – law firm Anthony Phillips James & Co currently represents 1500 clients that contend that they have been mis-sold SIPP investment schemes.
More than 1m people currently have SIPPs, with £300bn or assets under management with 160 firms; it seems likely that they will have to bear the brunt of the cost of extra due diligence and the likelihood is that there will be business failures as a consequence.
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45 DIY Investor Magazine | Dec 2018

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