More Unregulated SIPP Investment Warning

More Unregulated SIPP Investment Warning.

Many clients and readers have Self Invested Personal Pensions (SIPPs). 

The finance industry regulator, the Financial Conduct Authority (FCA) has been working for a number of years now on increased capital adequcy for banks, insurers, financial advisers and other financial investment firms such as those that many SIPPs invest in. 

This is all to do with financial strength changes after the banking collapses and credit crunch.

For example, some SIPP investments can be far reaching from Bamboo, Rail Hubs in Spain through to wine, stamps and Forestry and timber for example.

The issue is whether these investments are regulated collective investments or unregulated (UCIS Unregulated Collective Investment Schemes).

The FCA has now introduced minimum capital adequcy requirements from £20,000.  What this means if if a person, sitting in an office on theor own is running a Forestry Investment Fund then for it to be a regulated fund, it must have capital of at least £20,000 and we do not mean £20,000 of client money invested, we are talking about free capital of the people who established the fund to manage it.  Your investment is seperate.  You would be surprised at how some of these small specialist funds are run and what the back office systems are (sometime just a spreadsheet on a computer).

The reality is that with many, the capital requirements can be a minimum of £20,000 or 3 X monthly expenses.  This can easily grow to £100,000's.

There is a concern that many SIPP investment collectives will now move to be unregulated to avoid this.

What does does mean?

YOU HAVE NO INVESTOR PROTECTION AT ALL  - Beware of Cowboys

Guidance

If you are looking at specialist SIPP investment, always ask whether they are regulated or unregulated investments.  If they claim they are, ask for their FCA number.