A Sipp provider can’t do your research for you

Pension savers who lose money after making unregulated investments without taking financial advice are unlikely to be able to claim redress from their pension providers following a recent court ruling.

The judgment is a blow to the notion that providers should protect savers from high-risk pension investments in all circumstances.

Lawyers acting for a saver with a self-invested personal pension (Sipp) run by Options Pensions had hoped the company would be forced to pay compensation after it followed his instructions to invest in a high-risk, unregulated property scheme. The scheme subsequently resulted in big losses for the saver. However, Options Pensions argued that like many providers of Sipps, it operated on an execution-only basis and had made it clear that it did not offer investment advice. It said it had therefore simply carried out its customer’s instructions and was not under any obligation to carry out due diligence on the investment, or to warn the saver against making it.

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The ruling has been keenly awaited by the pensions industry. It is in line with the stance taken by the Financial Ombudsman Service, which has also refused to order pension providers to pay compensation in similar cases.