The Pension Ombudsman Service (POS) has held that a Self-Invested Personal Pension (SIPP) Operator which permitted overseas, unregulated, investments had no duty to ensure the investments were suitable for the investor. 


In 2011, the investor, Mr Beasley, had sought to invest around £82,000 of his SIPP in green oil and, prospective Caribbean development, Harlequin. The SIPP Operator acted in the usual way, as pension trustee and administrator. It verified that the investments were acceptable to HMRC and undertook what the POS described as basic checks on the investments. Having ultimately accepted the investments into the SIPP, the investments ran into difficulties. Mr Beasley argued that, as trustees, the SIPP Operator had a high duty of care to consider if investments were appropriate for a particular pension. 

The POS did not agree: there was no duty in this case under the Trustee Act 2000 to consider and select investments. That was for the investor and, where applicable, his/her advisor. That was clear from the welcome letter the Operator sent to the investor at the outset, which also noted that the proposed investment was unregulated and not covered by the Financial Services Compensation Scheme. Mr Beasley signed further letters confirming that he understood that the Operator was not advising or endorsing the investments. 

The POS also acknowledged that the regulator, the Financial Conduct Authority (FCA), had certain expectations of SIPP Operators and the checks undertaken before accepting investments into a SIPP. However – at least as at September 2011 – the POS considered the regulator’s primary concern wascontrols and systems designed to flag poor advice. That did not apply here as Mr Beasley was notadvised by anyone to invest as he did. 


The decision is interesting as it is directly at odds with another case concerning a different investor in an unregulated investment, against the same Operator. That case was determined last year, but at the Financial Ombudsman Service (FOS). It found that the regulator’s 2009 Thematic Review into SIPP Operators required enquiries into the suitability of a proposed investment for a given investor. That decision has currently been removed from the FOS’ website and is being reviewed with the parties’ consent. If the decision is upheld, then the POS looks to be a much more tolerant tribunal than the FOS for a SIPP Operator facing a complaint regarding its due diligence or suitability of an investment. 

It also remains to be seen if the POS will be as supportive of SIPP Operators’ past practice when it comes to investments in SIPPs made after the FCA’s Thematic Review of October 2012 (and its repeat paper in 2013, and ‘Dear CEO letter’ of last year). Those papers are much more prescriptive as to the requirements on SIPP Operators, its due diligence and its monitoring of investments, particularly those which are unregulated and in collective investment schemes. 

Further reading: 

Michael Beasley v Berkeley Burke SIPP Administration Ltd

Law-Now: FOS to review decision that SIPP operators should assess suitability of investments  

Law-Now: SIPP professionals hit from all sides: regulator, tribunal and ailing IFAs

Law-Now: A new capital framework for SIPP operators