UK providers of self-invested personal pensions risk accusations of mis-selling and negligence if they do not guard against over enthusiasm,...

UK providers of self-invested personal pensions risk accusations of mis-selling and negligence if they do not guard against over enthusiasm, according to City-based law firm Reynolds Porter Chamberlain. RPC partner Charles Suchett-Kaye, told trade news serviceIFAOnline: "The excitement surrounding the new rules means there is a real risk that individuals will make incorrect investment decisions. In such cases it is always likely that they will look to blame their advisors for any financial loss that results." "Those at risk of mis-selling and negligence claims include professional trustees of Sipps, Sipp scheme providers, administrators and financial advisors who recommend Sipps to their clients or who advise on investments within them. Given the level of anticipation about the new pension regime, these advisors may find it part of their job to dampen down Sipps euphoria." One of the major potential problems is that some individuals may be better off remaining in existing schemes. Advisors must avoid accusations of advising clients to switch in order to earn themselves commissions, according to RPC. The reasons for switching into a Sipp must be well recorded. The annual and lifetime limits must be observed assiduously. These are currently £1.5 million ($2.68 million) for fund value and £215,000 for annual contributions and if they are exceeded, an income tax charge will arise with a marginal rate of 55 per cent. Another area of particular concern is that the ability to transfer residential property into a Sipp will be oversold according to Mr Suchett-Kaye. “The danger is that the tax and borrowing advantages of using the Sipp will be stressed regardless of whether the property fits into the pension plan," he told IFAOnline.