The Financial Services Compensation Scheme (FSCS) has announced an increase in its final levy for the year 2019/20 of £16 million to reflect, in part, the continued growth in the number of claims being brought against SIPP operators arising out of complex due diligence actions.
Increase In SIPPs Claims
The FSCS stresses that predicting the number of likely SIPP claims is a difficult task. Money Marketing has reported that from the 22 SIPP providers surveyed by the FCA, only 48 SIPP related complaints had been referred to the Financial Ombudsman Service (FOS) in the past year. However, there is an apparent discrepancy between the self-reporting of these providers and the overall FOS figures.
The FOS figures for 2017/18 showed that there had been 2,051 complaints related to SIPPs, over 40% of the total pension complaints. This was considerably higher than the 1,493 SIPP complaints for 2016/17.
We will know on 15 May, with the publication of the FOS’ latest annual report, whether a further increase has been seen in the past year.
Comment
This upward trend in SIPPs claims is in line with our experience. FOS complaints do not necessarily provide an accurate picture of likely claims, as some claimants pursue legal action as an alternative, particularly in relation to complex due diligence claims, in which the sums involved often exceed even the FOS’ expanded compensation limit.
We are also aware that there are a large number of claimants who are awaiting the judgment in Carey Pensions before deciding how to move forward with their claims. Should the judgment be favourable to those claiming against SIPP providers it is inevitable that we will see a significant increase in these types of claim.
How Nelsons Can Help
Cathryn Selby is a Partner in our Dispute Resolution team specialising in professional negligence claims.
If you would like further advice in relation to this subject, please contact Cathryn or another member of our expert team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.