Spotting mis-sold SIPPs before they impact your finances is crucial—but sadly, many UK investors have only realised too late.

In the 2023/24 financial year, the Financial Services Compensation Scheme (FSCS) paid out £262 million in compensation for claims related to investments, pensions, and financial advice, underscoring the scale of the issue in today’s market.1

At EveryInvestor, we’re committed to helping you navigate the complex world of pension advice with confidence, which is why we’ve researched the latest data and warning signs around mis-sold SIPPs—so you can protect your investments and take action if needed.

Read on to recognise mis-sold SIPPs and the steps you can take if you’ve been affected...

What's A Mis-Sold SIPP & How Can You Address It?

A mis-sold SIPP is when an individual is advised to invest in a Self-Invested Personal Pension (SIPP) that is unsuitable for their needs, often involving high-risk investments or unsuitable transfers.

To address a mis-sold SIPP, file a complaint with the SIPP adviser or financial firm involved, seek compensation through the Financial Ombudsman Service, or the Financial Services Compensation Scheme (FSCS) if the adviser or firm is no longer operating.

Let's take a closer look at this info:

What Is a SIPP?

A SIPP (Self-Invested Personal Pension) is a pension plan available in the UK that offers individuals greater control and flexibility over their retirement savings.

With a SIPP, you can choose from a wide range of top investment options, such as stocks, bonds, and other assets, allowing you to manage your pension fund according to your financial goals and risk preferences.

This self-directed approach gives you the freedom to make informed investment decisions and tailor your retirement strategy.

What Is a Mis-Sold SIPP?

A mis-sold SIPP refers to a pension plan that has been improperly marketed or sold to individuals, leading to financial losses and potential difficulties for those affected.

Following the 2014 pension reforms, SIPPs gained significant popularity, but concerns regarding mis-selling have existed long before then.²

While SIPPs themselves are not inherently unsuitable products, they have been subject to abuse by certain entities, leading to instances of mis-selling.

Here's a little bit of history:

Pensions Scandal of the 1980s & 1990s

During the 1980s and 1990s, the UK witnessed a large-scale pensions mis-selling scandal, where individuals were persuaded to leave their occupational pension schemes in favour of personal pensions.³

This often involved high-pressure sales tactics, misleading information, and an overall lack of transparency; as a result, many individuals lost valuable benefits and faced significant financial setbacks in the long term.

British Steel Pension Scheme Scandal of the 2010s

The British Steel Pension Scheme scandal stands out as one of the most significant instances of SIPP mis-selling in recent years; in this case, financial advisers targeted British Steel workers, convincing them to transfer their pension funds into high-risk investments, often involving SIPPs.

The outcome was devastating for many workers, and ​according to a 2022 report by the National Audit Office (NAO), some members of the British Steel Pension Scheme (BSPS) incurred losses of up to £489,000 due to unsuitable advice to transfer out of their defined benefit pensions.⁴

What Should You Do if You've Been Mis-Sold a SIPP?

If you believe you've been mis-sold a SIPP, the first step is to identify the signs of mis-selling—ask yourself: did the financial adviser fail to assess your financial situation or risk tolerance? Were the risks not clearly explained, or were there undisclosed charges?

Once you've identified the mis-selling, file an official complaint with the company involved and request a detailed explanation; if their response is unsatisfactory, escalate the issue to the Financial Ombudsman Service (FOS).

You may also wish to seek legal advice or assistance from a reputable claims management company.

What Are the Risks of a Mis-Sold SIPP Pension?

Mis-sold SIPP pensions can seriously undermine your retirement plans by exposing you to unsuitable or high-risk investments.

This often happens when advisers fail to assess your financial circumstances properly or push products that are not aligned with your goals.

For retirees relying on pension income, a poorly advised transfer can result in significant losses and long-term instability, which is why early recognition is essential to seek redress and protect your financial future.

How Can You Spot the Signs of SIPP Mis-Selling? 3 Major Signs

Recognising the signs of SIPP mis-selling is vital to safeguarding your retirement savings, and red flags include being pressured into transferring your pension, being promised high returns with little explanation of the risks, or being advised to invest in assets that don't suit your risk profile or financial goals.

If you were given limited information, felt rushed, or weren’t fully informed about fees and potential losses, it’s worth reviewing the advice you received to determine whether you were mis-sold your SIPP.

Look at the 3 main signs to look out for:

#1. High-Pressure Sales Tactics

If you felt rushed or pressured into transferring your pension, this mean you might have been exposed to high-pressure sales tactics and could be a sign of mis-selling.

Reputable advisers should give you time to consider your options and provide clear, balanced information—never use scare tactics or urgency to force a decision.

#2. Unrealistic Promises of High Returns

Unrealistic romises of high returns with minimal or no risk are a major red flag; legitimate pension investments carry some level of risk, and advisers should always explain this clearly.

Be cautious if you were assured of guaranteed profits without proper explanation.

#3. Investments Not Aligned With Your Goals

An adviser should tailor recommendations to your individual circumstances and goals, and if you were advised to invest in assets that felt too risky, irrelevant to your objectives, or unsuitable for your retirement timeline, it may indicate mis-selling.

Which 9 Companies & Individuals Have Been Involved in Mis-Selling SIPPs?

9 firms and advisers have been linked to SIPP mis-selling over the years, and names that have surfaced include Multicorp Rose, Pembrokeshire Mortgage Centre, and Avalon.

These entities have faced scrutiny for advising clients to invest in high-risk or unregulated schemes, often without properly assessing suitability or disclosing key risks.

These are some of the entities to consider:

#1. Avalon

Avalon Investment Services Ltd was a SIPP provider that was dissolved in 2018 following its acquisition by the Embark Group.

Before its closure, Avalon placed client funds in high-risk, illiquid investments such as HJ Commercial Plc and the Ukrainian Property Fund—many of which ultimately failed, leaving investors out of pocket.¹⁰

In 2019, the Financial Services Compensation Scheme (FSCS) began investigating Avalon for potential due diligence failings, and by 2020, the firm was declared ‘in default’, meaning it could not meet claims for compensation and allowing affected clients to seek redress for the financial harm they had suffered.

Multicorp Rose

Multicorp Rose, an advisory firm previously recommending Avalon SIPPs, entered liquidation in 2019 following its involvement with unauthorised 'pension introducer firms' and subsequent regulatory investigations.¹² 

The FSCS is currently managing claims associated with Avalon's conduct. 

What does that mean?

If you can prove Avalon failed in its due diligence, you might qualify for compensation.

Gaudi Limited

Gaudi Regulated Services Limited, founded in 2008 and known for managing multi-million accounts, primarily dealt in SIPPs and had connections with firms like Beaufort Securities and Greyfriars Asset Management, which were, respectively, placed under insolvency and sanctioned by the FCA.¹³ 

Gaudi faced numerous rulings against it by the Financial Ombudsman Service regarding the specific investments within its SIPPs.¹⁴ 

In light of these rulings and their financial implications, Gaudi declared insolvency and was placed into administration by the FCA in 2023, with its pension division taken over by Platform One Limited.¹⁵ 

This shift allowed Gaudi's clients to maintain their SIPPs as usual. 

The Financial Services Compensation Scheme (FSCS) is currently processing claims concerning Gaudi to assess eligibility for compensation. 

The FSCS also continues to assess any separate claims against authorised entities related to investments in a Gaudi SIPP.

Avacade Limited & Alexandra Associates

In 2020, Alexandra Associates, trading as Avacade Future Solutions, were found to have ‘made misleading statements’ when advising clients to move their money to SIPPs.¹⁶ 

This finding was upheld by the Court of Appeal in 2021.¹⁷

What happened?

Client funds were invested in alternatives like HotPods (rentable office spaces), tree farms, and Brazilian property projects; over 2,000 customers moved roughly £91.8m from their pensions into SIPPs.¹⁸

Around £68m was channelled into products pushed by Avacade and AA and £905,000 found its way into a fixed-rate bond for a Brazilian property project, and from these ventures, Avacade and AA raked in around £10.8m in commissions.¹⁹

Unfortunately, many of these investments have collapsed or are currently in liquidation.

How was it stopped?

The FCA lodged a petition and in August 2020, the High Court ordered Avacade, AA, Craig Lummis, Lee Lummis, and Raymond Fox to pay restitution to the value of £10,715,000.²⁰ 

What does that mean for me?

If you are an Avacade/AA client who suspects a loss, be sure to reach out to the FCA and provide them with your details. 

Harlequin Management Services (South East) Limited & David Ames

Harlequin Management Services were at the centre of significant concerns and controversies within the financial industry, specifically relating to SIPP investments in resort properties.²¹ 

David Ames, a former window salesman and sole director of the now-liquidated Harlequin Management Services, pitched the company as a luxury Caribbean property developer, and investors, many of them novice and elderly SIPP holders, poured funds into what they believed would be their dream retirement homes.²²

Despite selling about 9,000 units, Ames only started construction on two sites, completing no more than 200 properties at Buccament Bay.²³ 

Ames accumulated wealth totalling £6,2 million for himself and his family, doling out monthly payments of £10,000 to his wife and son.²⁴

Misusing his chairmanship role at Harlequin, Ames exposed over 8,000 investors to substantial financial risk between 2010 and 2015.

In response 

UK financial authorities had issued warnings to financial advisers about exercising special caution regarding pension investments in Harlequin.²⁵

Following a thorough SFO (Serious Fraud Office) investigation, Ames was sentenced in August 2022 to 12 years’ imprisonment and a 15-year directorship ban for heading the £226 million scheme.²⁶

SFO director Lisa Osofsky stated, “The conviction was achieved after extensive analysis of documents, tracing of 8,000 investor deposits, and testimony from 25+ witnesses.”

Caledonian International Associates 

Caledonian International Associates, the trading name of MMG Associates, participated in Armed Forces pension transfers, despite lacking authorisation to provide pensions advice.²⁷

From 2012 to 2013, David Clark introduced over 500 clients to Carey Pensions UK, transitioning them from their Armed Forces Pensions Scheme (AFPS) to a SIPP with Carey's.²⁸

However, AFPS, with its guaranteed income and lower costs compared to SIPPs, is generally a better choice for most members.

Most regulated financial advisers would not have suggested a transfer from a defined benefit pension scheme like the AFPS unless it was to the client's advantage.

Schemes like AFPS are prized for their benefits, including a guaranteed income, and they do not carry the same costs as private arrangements like SIPPs. 

What does that mean?

Transferring would often expose members to risks that were incompatible with their needs. 

If regulated firms or individuals played a role in such pension transfers and breached FCA regulations, claims can be made. 

Pembrokeshire Mortgage Centre

Pembrokeshire Mortgage Centre Ltd was an independent financial advisory firm implicated in the British Steel Pension Scheme scandal.²⁹

PMC exploited Tata Steel's 2016 decision to offload its UK business.³⁰

The firm advised numerous steelworkers to switch their defined benefit pensions into high-risk investments and SIPP products, resulting in lost accrued benefits. 

In December 2017, Pembrokeshire, together with nine others, agreed to cease transfer work under an arrangement with the FSCS. 

The FSCS officially declared the firm in default in January 2021.³¹

The FCA revealed that the firm generated £2,1 million in fees from DB pension transfers from June 2015 to December 2017. 

As of August 2022, the FSCS had affirmed nearly 200 pension transfer complaints against the firm, leading to nearly £13 million in payouts.³²

The FSCS is currently handling all the claims against the defunct firm.

 

Aiden Henderson, Andrew Page, & Thomas Ward

Independent financial advisers Aiden Henderson, Andrew Page, and director Thomas Ward were involved in a mis-selling scandal that cost investors over £44 million.³³

This misconduct occurred between 2014 and 2015 at Henderson Carter Associates and Financial Page, where Ward illegally held directorship.³⁴

In 2022, the FCA barred the three from the financial sector and imposed fines. They are also prohibited from director roles without court approval for 10 years by The Insolvency Service.³⁵

These individuals advised clients to transfer pensions into SIPPs, without adequately explaining the high-risk nature of investments in Mauritius, which were not under UK regulation.

Their firms, in collaboration with Hennessy Jones, had significant stakes in the SIPPs. 

Following liquidation in 2017, the FSCS paid £44,1m in compensation, but some investors experienced considerable losses due to claim caps.³⁶

With this case in mind, Rob Clarke, chief investigator at the Insolvency Service, emphasised how important it is for financial advisors to explain the financial risks involved when making investments. 

Terence Wright

Terence Wright was a director at TPS Land, an unregulated firm in Spain.³⁷ 

The company led a network tied to mis-sold SIPP pension claims, and it included entities like CL&P Brokers.

TPS Land did not have FCA approval, but it still convinced many UK pension holders to risk their savings in SIPPs.³⁸

The FSA had been watching Wright since 2010, and warned him to stop giving unauthorised investment advice.³⁹ 

The FSA indicated Wright might target UK clients via Cash in Your Pension.

In 2019, Wright's name resurfaced in a court case that involved SIPP provider Carey Pensions and a driver, Russell Adams. 

Wright had introduced Adams to a risky SIPP investment in Storefirst and Australian farmland.⁴⁰ 

Adams claimed Carey Pensions mis-sold him a SIPP through CL&P which resulted in worthless investments in Store First. 

Carey Pensions initially won in 2020, however, the verdict was reversed in 2021.

The reversal allowed Adams to invalidate the SIPP agreement due to CL&P's involvement. 

As a result, Adams could recoup his investment and claim compensation for his losses.

Preventing SIPP Mis-Selling: What Role Do SIPP Providers & Advisers Play?

SIPP providers and advisors play a crucial role in the management and advice of Self-Invested Personal Pensions. 

Things to keep in mind: 

• Responsibilities & Duties: SIPP providers are responsible for offering a range of investment options and administering the pension scheme. Advisers, on the other hand, have a duty to assess the investor's financial goals, risk tolerance, and investment knowledge, and provide suitable recommendations accordingly. They must act honestly, fairly, and professionally, ensuring that the investments align with the client's objectives and risk appetite.
• Potential Negligence or Misconduct: Instances of negligence or misconduct can occur in the SIPP industry. Some providers and advisors may fail to conduct proper due diligence on investment opportunities, recommend unsuitable products, or fail to disclose risks adequately. This can result in significant financial losses for investors.
• Assessing Provider & Adviser Involvement: When assessing the involvement of SIPP providers and advisors, it is essential to consider individual cases, gather evidence of negligence or misconduct, and consult legal professionals. The Ombudsman or the FSCS can assist in determining whether the provider or advisor breached their responsibilities.

What Is the Financial Conduct Authority (FCA)?

The Financial Conduct Authority (FCA) is the regulatory body overseeing financial services in the UK. 

It plays a crucial role in maintaining the integrity of the SIPP industry and protecting investors' interests.

FCA Regulations & Guidelines

The FCA establishes regulations and guidelines that SIPP providers and advisors must adhere to. 

These include requirements for suitability assessments, risk disclosures, and treating customers fairly. 

Compliance with these regulations is crucial to ensure investor protection.

FCA Investigations & Enforcement Actions

The FCA conducts investigations to identify instances of mis-selling and regulatory breaches within the SIPP sector. 

If misconduct is found, the FCA can take enforcement actions, including fines, suspensions, or bans on individuals or firms involved.

Regulatory Implications When SIPPs Are Mis-Sold 

The FCA's actions against providers and advisors involved in mis-selling SIPPs can have significant implications. 

It helps protect investors, raises awareness of potential risks, and holds accountable those responsible for negligence or misconduct.

How Mis-Sold Stocks & Shares Impact SIPPs

Mis-sold stocks and shares within a SIPP can lead to severe financial losses and reduced retirement income.

This type of mis-selling occurs when advisers recommend high-risk or unsuitable investments without considering the individual's financial circumstances or risk tolerance.

For those over 65, these losses can have immediate and long-lasting effects on their standard of living.

If your SIPP includes investments that you were not fully informed about or that carried risks you were unaware of, you may have been mis-sold.

Seek professional advice to evaluate whether your investment was appropriate and, if not, explore your options for claiming compensation.

How Does Compensation for Mis-Sold SIPPs Work?

Compensation for mis-sold SIPPs may be available to investors who bought SIPPs after receiving misleading advice.⁴¹

Compensation aims to restore the investor to the position they would have been in had the mis-selling not occurred.

Compensation Criteria

To claim compensation, individuals must demonstrate that they received unsuitable advice, suffered financial loss as a result, and that the provider or advisor was negligent or in breach of their duties. 

Each case is assessed individually, taking into account the specific circumstances and evidence presented.

Calculating Potential Compensation

The calculation of potential compensation takes into account the financial loss suffered by the investor. 

This includes the initial investment, any investment returns lost, and any additional costs or fees incurred as a result of the mis-sold SIPP.

Compensation Limitations

There may be limitations to the amount of compensation an investor can receive. 

The Financial Services Compensation Scheme sets compensation limits, which may vary depending on the nature of the claim and the circumstances involved.⁴²

How to Make a Mis-Sold SIPP Claim

If you believe you have been a victim of a mis-sold SIPP, it is important to understand the process of making a claim and the available options for seeking resolution.

Gathering Evidence When Suspecting Your SIPP Was Mis-Sold

If you suspect that you have been mis-sold a SIPP, gather all relevant evidence and documentation. 

Keep records of conversations, statements, and any correspondence with your financial adviser or SIPP provider. 

These records will be crucial in establishing a case and seeking compensation. 

Experts stress the importance of documenting everything to build a strong claim.

Complaints Process

Start by submitting a complaint to the SIPP provider or advisor involved in the mis-selling. 

They are obliged to investigate and respond to your complaint in a timely manner. 

Make sure to provide all relevant details and supporting documentation to strengthen your case.

Financial Ombudsman Service (FOS)

If you are not satisfied with the response from the provider or advisor, you can escalate your complaint to the Financial Ombudsman Service (FOS). 

The FOS is an independent body that mediates disputes between consumers and financial institutions. 

They will review your case and provide a fair and impartial decision.

Time Limits & Deadlines

It is crucial to be aware of the time limits for making a mis-selling claim. 

Generally speaking 

You have six years from the date of the advice or knowledge of the mis-selling, or three years from when you reasonably became aware of it, to make a claim.⁴³ 

However, these time limits can vary, so it's important to seek advice promptly.

How to Seek Professional Help

Engaging the services of professionals experienced in mis-sold SIPP claims can significantly enhance your chances of success. 

They can guide you through the claims process, provide expert advice, and handle negotiations on your behalf.

Mis-Sold SIPP Claims Specialists

Mis-sold SIPP claims specialists are professionals who specialise in assisting individuals with mis-selling claims. 

They have in-depth knowledge of the process and can provide tailored guidance to help you navigate through the complexities of your claim.

Independent Financial Advisers (IFAs)

Consulting an independent financial advisor (IFA) can also be beneficial. 

An IFA can review your situation, assess your claim's merits, and provide independent advice on the best course of action. 

They can also help you find suitable alternative investment options, if necessary.

Legal Representation

In certain cases, legal representation may be necessary, particularly when dealing with complex or high-value claims. 

Solicitors specialising in financial mis-selling can provide legal expertise, gather evidence, and represent your interests throughout the claims process.

How to Prevent Future SIPP Mis-Selling

Preventing future SIPP mis-selling is crucial to protect investors and maintain the integrity of financial markets. 

There are several key strategies to help prevent future instances of SIPP mis-selling:

• Consumer Education & Awareness: Increasing consumer education and awareness is vital to prevent future mis-selling. Take the initiative to educate yourself about financial products, risks, and regulatory guidelines, and always stay informed and ask questions before making any investment decisions.
• Adviser & Provider Due Diligence: Before engaging with a SIPP provider or advisor, conduct thorough due diligence. Check their credentials, reviews, and any past complaints. Look for professionals who are regulated by the FCA and adhere to industry best practices.
• Regulatory Enhancements: Regulatory bodies such as the FCA continuously work to enhance regulations and improve investor protection. Support regulatory efforts by staying informed about changes, providing feedback, and participating in consultations to ensure a robust regulatory framework.
• Stricter Compliance Monitoring: Implement robust compliance monitoring processes to ensure that SIPP providers and advisors adhere to regulatory guidelines and industry best practices. Regular audits, inspections, and assessments can help identify potential misconduct and take appropriate action promptly. 
• Professional Standards & Qualifications: Establish and promote high professional standards and qualifications for SIPP providers and advisors. Encouraging ongoing professional development, adherence to a code of conduct, and membership in professional bodies can help raise the overall quality and integrity of the industry.
• Whistleblower Protection: Create a safe environment for individuals to report instances of mis-selling and misconduct. Implement whistleblower protection measures to encourage individuals with knowledge of fraudulent activities to come forward without fear of reprisal.
• Collaboration & Information Sharing: Encourage collaboration between regulatory bodies, industry stakeholders, and consumer advocacy groups. Sharing information, insights, and best practices can help identify emerging trends, address systemic issues, and promote a collective effort in preventing mis-selling.

By combining these strategies, regulators, industry participants, and investors can work together to foster a more transparent, accountable, and responsible financial environment.

Preventing future mis-selling is a collective responsibility that requires ongoing vigilance, awareness, and a commitment to investor protection.

Is a SIPP Still a Good Idea Despite the Mis-Selling Dangers?

A SIPP may still be a good idea despite the mis-selling dangers, depending on your unique needs and circumstances. 

While SIPPs can be a suitable option for retirement planning, the mis-selling dangers highlight the importance of careful consideration and due diligence. 

Through diligent research, professional advice, and strategic management, you may be able to maximise the benefits while mitigating the potential risks.

Common Questions on Mis-Sold SIPPs

SIPP Mis-Sold? Concluding Thoughts

We have navigated the minefield of mis-selling SIPPs, highlighted its potential impact on your hard-earned savings, and offered a roadmap to seek redress and compensation. 

It’s important to be vigilant, question advice, and make sure you do extensive research before choosing a SIPP provider and product. 

In doing so, you can reap the investment benefits of a SIPP, instead of falling victim to mis-sold SIPPs.