Carrying out due diligence on SIPP providers has become “more important than ever before” for advisers, Stephen McPhillips told delegates at the 2019 Retirement Planner Forum.
Speaking to the almost 100-strong audience on Friday (14 June), the Dentons Pensions technical sales director (pictured) said there were several factors advisers should consider when going through their due-diligence process.
Advisers needed to consider capital adequacy when working with a self invested personal pension (SIPP) provider, he said, as he reminded delegates all providers were required to hold a minimum level of capital.
McPhillips also argued that, if a provider had large exposure to non-standard investments, then in theory they should hold a higher level of capital adequacy to help protect against any downturn in performance.
He warned advisers that, if they found it difficult to obtain capital adequacy information from a SIPP provider, this should set off alarm bells.
“If providers are unwilling to offer information, there must be a reason why,” he added. “It should be an easily-available piece of information for you.”
“The number of court cases is why they have a bad reputation at the moment,” he said. As a consequence, he continued, SIPP providers may well have also closed their doors to any “non-standard type of investment”.
Earlier this week, GPC SIPP had entered insolvency after fighting a raft of claims and complaints made against it in relation to investments in the Harlequin property scheme.
Administrators Smith & Williamson were appointed as joint administrators of the SIPP provider, which was previously known as Guardian Pension Consultants Ltd.