Pension switching can be a complex area, and it is important for the reputation and future success of the pensions industry that advisers are seen to make appropriate recommendations, so we fully support the FSA's continued focus on the quality of advice.
We only sell through professional advisers, not directly to individuals, because we believe this is an important safety net. As a specialist, most of our SIPPs are established for a specific reason - perhaps a property purchase, unlisted share transaction or because the client's strategy demands a more varied investment portfolio. In these cases, the SIPP is 'fit for purpose', because it addresses a specific need.
The best advisers take time to understand all the products available, which often means talking directly to knowledgeable and experienced staff at the provider. For example, we regularly take calls from advisers who consider switching clients from a SSAS to a SIPP, who then decide against the move, once they have all the facts to make a fully informed recommendation.
We believe advisers are also in the front line of preventing 'mis-buying'. Despite not needing the extra flexibility, SIPPs have become regarded by some people as a 'must have', although a personal pension would be more suitable. Life offices that have jumped on the SIPP bandwagon with heavily restricted hybrid or deferred plans are only making the adviser's job harder, and this is perhaps reflected in the FSA's figures.
Finally, the FSA is right to raise its concerns about switching costs but for many clients, SIPPs can work out cheaper than personal pensions. The debate should centre on value for money rather than cost - is the member using the flexibility that the SIPP allows? Is the IFA receiving a better service from the provider which allows them to offer a more efficient service to the client?
'Truly making a difference'
Avoidance, evasion and non-compliance
From 6 April 2019
Marcus Brookes appointed CIO