Financial Services Authority (FSA) regarding the marketing of residential property destined to be invested into a self invested personal pension (Sipp).
The provider says it is concerned some of the marketing of Sipps emphasises the benefits without making enough mention of the possible pitfalls.
It argues adverts which tell consumers that by buying residential property through a Sipp they will effectively reduce the cost of the property by 40%, because of the tax breaks, fail to warn there could be a substantial tax bill for investment in overseas properties or that the investor could lose control of their property.
NU claims it is concerned some customers, particularly those with final-salary pension schemes, might be tempted to transfer funds out of their schemes and buy a residential property through a Sipp, without understanding the implications of such a move.
Iain Oliver, head of pensions at NU, says: "We are concerned that some of the current marketing of new Sipp investments is over-simplistic for what is a very complex decision with long-term implications. We believe that both the possible rewards and risks should be portrayed in a balanced way to ensure that people understand what the implications of investing residential property in a Sipp are.
There is no substitute for good professional advice and we would urge any customers considering investing residential property in a Sipp to seek such advice."
Abi Jones, a spokeswoamn for the FSA, says the regulator is waiting for the Tresury's consultation document on Sipps to be published before it takes a stance on what it believes is needed in terms of any regulation. "Let's wait and see what happens with the consultation. Once that comes out we will have a better undferstanding of what type of regulation is needed and what our stance will be," she says.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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