A worthwhile question, of course, and one that Mattioli Woods is keen to help its clients answer. Wealth Management Director Alex Brown explains more…
With so much turmoil in investment markets at the moment, clients would be forgiven for being more concerned over the valuation of their assets, rather than the actual protection of those assets.
However, a recent court case has brought the latter rather sharply into focus. As it could result in you asking us the question headlining this piece, this isn’t something we are shying away from especially when – when it comes to Mattioli Woods, anyway – the answer is: “Perfectly safe”.
At the start of November last year, SIPP provider Berkeley Burke had its claim for a judicial review against a decision by the Financial Ombudsman Service (FOS) dismissed. While they are appealing the decision, essentially the case against them was this…
A client – known as Mr Wayne Charlton – had invested in a green oil scheme in Cambodia. While it represented a permissible investment for the SIPP, it was a scam, so Mr Charlton lost his invested amount.
Now, while Berkeley Burke a) did not advise on the investment, and b) confirmed it was an execution-only investment for which the client duly acknowledged he had no advice from the firm, the FOS still ruled it was responsible for investigating the investment as to ascertain how sound it was.
With Berkeley Burke’s claim dismissed – a decision of quite seismic nature – the FCA immediately wrote a ‘Dear CEO’ letter¹ to all SIPP operators (including ourselves), advising:
“Pending the outcome of any appeal of today's judgement and these other cases, we expect you to consider the potential implications of them for your firm and its customers. We will be contacting SIPP operators to discuss what these may be. If the outcome of any of these cases calls into question your firm's ability both now and in the future to meet its financial commitments as they fall due, you must notify the FCA immediately.”
And the pension provider world is taking note – for example, fellow SIPP and SSAS provider Curtis Banks sent an email² to its professional connections, where it called the FCA’s letter’s tone and request “serious, and rightly so”.
“The information the FCA is asking SIPP operators to provide is the same kind of information we have been encouraging advisers to request as part of their due diligence,” it said.
Elsewhere in the SIPP world, provider Greyfriars went into administration in October after some issues with their DFM proposition. While unrelated to what has happened with Berkeley, it does show how fragile some operators are. Therefore, we can’t help but think this ruling will have ramifications for other providers, who are now likely concerned about their ‘book’ of execution-only investments.
However, what we at Mattioli Woods can definitely say to you, our clients, is that this Berkeley ruling should not give you any cause for concern.
Why? Well, we know you well, and your investments first-hand. Plus, our internal capital adequacy assessment process – which ensures we have long-term internal procedures and processes in place to cover all of our material risks – is more than met, and monitored on a regular basis. Our pillar 3 disclosure details, meanwhile – which promote market discipline through regulatory requirements – are publicly available for anyone who would like further information.
As a business, we continue to trade profitably, and have done so for every year we have been listed on the AIM market (since 2005). We also have a strong and secure process for dealing with non-standard investments.
As such, rest assured that despite the current market volatility, your pension is safe with Mattioli Woods.
If you have any worries whatsoever, please contact your consultant, who will be happy to help, and put your mind at rest.
¹ FCA, 2018
² Curtis Banks, 2018