Just because an investment has been ‘SIPP-approved’ doesn’t guarantee its success.
It’s up to you to take responsibility for the investment choices of the money in your SIPP. Arguably, that’s why it says ‘self-investment’ on the tin!
Investor Julian Holy, a retired property lawyer, alleged that his SIPP provider, Hornbuckle Mitchell failed to undertake proper due diligence checks on a property investment recommended by Independent Financial Adviser Bentley-Leek Financial Management.
He invested three tranches of £100,000 in three unregulated high-risk property related investments promising annual returns of 10%. The ventures, which ran into trouble due to financial mis-management by Mr Bentley-Leek and his co-director Mr M Dervish, went into administration in 2011. It has left very little chance investors will see a return of their money.
Summing up this landmark case, Deputy Pensions Ombudsman Jane Irvine said: “The complaint should not be upheld against Hornbuckle because, in my view, they had satisfactorily carried out rudimentary due diligence checks which were adequate at that time on the investments before allowing them to proceed.”
Mr Holy’s claim was dismissed as the ombudsman concluded his claims could not be supported and were based on ‘fundamental misunderstandings’. She believed he was responsible for assessing the nature of the Dubai investment and that responsibility fell on him to raise any concerns with his SIPP provider. As a conclusion, the SIPP provider was not judged to be responsible for the suitability of the investment or the advice given.
Whilst it’s important to ensure investments you’re considering for your SIPP are ‘approved’, so they’re unlikely to trigger a tax charge from HMRC, it’s always wise to seek the advice of a qualified and FSA regulated SIPP specialist. But ultimately, the decision to invest your 'self-invested' SIPP money is up to you.
Luckily, things have come a long was in the five years since Julian Holy invested, so don't instantly dismiss SIPP-approved investments that promise a great return. The internet has made it much easier for you to carry out the necessary research. In addition to studying the financials, thoroughly check out the people you're intending to entrust with your money. Google them. Read about them on Facebook, Twitter and LinkedIn. And if you investing in overseas property in some beautiful far-flung location, visit the site and keep tabs on it once your money has been put to work. It's hardly a chore.
Consider this. If you invest as much as Mr Holy invested, your travel costs are a tiny fraction of the money you've put at risk. Surely, it's money well spent to help protect your investment.
How this case has been reported online
Hornbuckle victory over £300,000 investor claim for SIPP losses
The Pensions Ombudsman has rejected a £300,000 investor claim against Hornbuckle Mitchell for losses in three property schemes in his SIPP. Julian Holy claimed Hornbuckle failed to carry out due diligence on the property-related SIPP investment recommended by his IFA, Bentley Leek Financial Management. Read the full story on Money Marketing.
Ombudsman rejects £300k Hornbuckle due diligence claim
Pensions Ombudsman refuses investor claim to recover £300,000 from trustees of collapsed SIPP. The Pensions Ombudsman has rejected a complaint against Hornbuckle Mitchell over alleged failure to conduct adequate due diligence on an esoteric investment placed in a self-invested personal pension, saying the complainant ‘fundamentally misunderstood’ the investment. Read the full story on FT Adviser.
Hornbuckle Mitchell wins £300k esoteric investment case
Hornbuckle Mitchell has won a case against an investor who claimed their due-diligence lost him £300,000 when esoteric investments held in his SIPP went wrong. Julian Holy invested in unregulated property related SIPP investments recommended by his IFA, Bentley Leek Financial Management Ltd (BLFM). Read the full story on IFA Online.
Hornbuckle wins £300k landmark case over SIPP due diligence
An investor in a collapsed property scheme has lost a landmark £300,000 claim against SIPP provider Hornbuckle Mitchell which it accused of failing to conduct due diligence on the investment. Investor Julian Holy claimed Hornbuckle failed to carry out proper due diligence checks on the property investment recommended by IFA Bentley-Leek Financial Management(BLFM) and made through sister company Bentley-Leek Properties (BLP). Read the full story on Citywire.
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