Warning issued against 'fake' SIPPS

Many SIPPs recommended by IFAs to clients are not true SIPPs, George Ladds, head of investment and pension research at Fair Investment Company claims.

While recommendations of self-invested personal pension plans (SIPPs) are increasing, Ladds expresses his concern that some products marketed as SIPPs are misleading consumers.

He says: "I am not particularly surprised that SIPPs are being recommended so often by IFAs because they do have a wide appeal, but I do have one word of warning; many ‘SIPPs' are just glorified personal pensions with extended fund choice championed by the provider.

"True SIPPs are ones that give investors freedom across all asset classes including, for example, passive and active funds, ETFs, structured products and investment trusts to name just a view."

John Moret, marketing director at Suffolk Life, says the name of a product is not important, as long as it is suitable for the client.

"I think it is largely a debate about semantics," says Moret. "The important issues are; are the investments appropriate for the client's risk profile and personal circumstances? Does the client understand what his product provides? Are the charges reasonable for the investments selected?

"If the answer to all three is 'yes' it really does not matter what the product is called. Clearly if the SIPP only offers a selection of funds from the provider then Mr. Ladds may have a point, but I am unaware of any SIPP product that has those limitations."