Is this SIPP provider guilty of advice-creep?

SIPP provider Curtis Banks has published a list of the investments it is least likely to accept into its pensions.

The company’s ‘maybe’ list (see below) has sparked controversy among advisers and other stakeholders over responsibility for investment choice.

While other providers are explicit about the investments they will and will not accept, Curtis Banks has gone a step further by asking advisers to justify why they believe their client is suitable for one of the investments on the 'maybe' list.

"This means Curtis is involved in the decision to invest,” said Greg Kingston, head of marketing and technical at Suffolk Life.

Kingston and others argue Curtis’s focus is on the individual client’s suitability, rather than investment vehicles generally, verges on advice.

Regulatory change

SIPP providers say the responsibility for investor well-being is shifting to them.
In August, HMRC said providers must ensure investors are suitable for flexible drawdown.

A recent AMPS poll suggested that, since 2010, SIPP providers have increased their screening of investments, particularly unregulated collective investment schemes (UCIS).

However, Robert Graves, former AMPS chair, said it is advisers’ responsibility to check the suitability of investments.

Problems for advisers?

Tony Sanchez, director of Clara Compare, questioned the SIPP providers’ role in quantifying investor risk. “Curtis Banks may have crossed into advice,” Sanchez said.

Jason Levett, stockbroker with McLaughlan Hook, questioned the suitability of unsophisticated savers investing with boutique providers, which may have led to the increased scrutiny of vehicles.

“Boutique providers are more closely aligned with professional investors, which poses the question whether such providers are a suitable option for less sophisticated investors,” he said.

Chris Budd, director of Ovation Finance, said SIPP providers have always restricted investment choices.

“Many providers refuse investment in unquoted equities because of problems arising from the rule that says you can only hold 20% of a company,” he said.

Budd said Ovation works with a provider which allows all investments within HMRC rules provided they are documented properly.

Client interest

Curtis Banks and some advisers argue checks on riskier investments are in clients’ best interests.

Steve Hart, business development director at Curtis, said the purpose of its ‘maybe’ list is to simplify business. “We are being clearer on the investments which usually fail the test,” he said.

“We are not treading on advisers’ toes. The principal of ‘the client can do what they want within HMRC rules’ is not good enough.”

Some advisers are happy with providers’ increased responsibility.

Yvonne Goodwin, director of Yvonne Goodwin Wealth Management, said due diligence on her clients’ commercial property SIPP holdings is in their interests.

Goodwin said SIPP providers may stray into advice but added: “Some advisers need this wake up call; I have witnessed some shocking behaviour from advisers.”