The number of SIPP claims is seeing a year-on-year rise. An average of 371 claims are upheld every quarter – this is just 50% of the claims raised against SIPP providers. Financial mis-selling is at the centre of many of these claims. We’re here to discuss why it happens.
What is financial mis-selling?
Financial mis-selling means you were sold a financial product that was unsuitable for you. Whether the risk was too high, or the investment level was not suited to you, your advisor should have made you aware of the suitability of the investment.
Why does financial mis-selling happen?
A main reason for mis-selling is the commission involved. Riskier investments with higher returns can lure in investors. This chance for a higher commission can tempt advisors into offering this type of investment. Sales staff are also under pressure to meet targets, making them more likely to offer an ‘easy sell’, even if it’s not necessarily the right option for you.
To secure the commission, financial advisors could mislead investors by playing down or being unclear on the level of risk. Focusing on the high returns of the scheme they want you to invest in, instead of the true characteristics of the scheme, could see you investing in a product you are not fully educated on. This is where the financial mis-selling occurs.
How to avoid financial mis-selling
Before making any investment in a SIPP, make sure you have all of the information on the product. Make sure your advisor is clear on the level of risk, as well as the characteristics of the scheme.
Advisors must take into account your needs before offering any advice. They must be able to explain the ins and outs of every product offered to you. If they can’t, you may be at risk of mis-selling.
If you believe you may have been a victim of financial mis-selling, get in touch today.