SIPP Accepted Service For Investments
It's designed to help promoters achieve the valuable status of 'SIPP ACCEPTED' for their investments, enabling them to attract funds from the £150 billion invested in SIPPs.
An Overview Of The SIPP Accepted Service
Before any product is accepted for investment into a SIPP, a SIPP operator needs to undertake a comprehensive commercial risk assessment and SIPP due diligence report. This ensures the interests of the SIPP operator and its clients are protected.
Being compliant with the rules of the Financial Conduct Authority (FCA) and HMRC legislation is an important aspect of this process. But being within legal and regulatory boundaries alone is not enough for a SIPP operator to accept a product for investment.
In an increasingly difficult marketplace, which has seen a number of high profile failures, any SIPP operator may reasonably turn down any product which it does not fully understand, or in which it does not have complete confidence.
There doesn't have to be a formal technical reason for any product to be declined. What's more, failure to accept a product doesn't mean the product is one that will fail. It may simply be outside of the current scope of the SIPP operator. By the same token, just because a product gains acceptance doesn't guarantee its success. It's a simple fact of investment life that failures occur, even in the case of some of the strongest of businesses.
Areas Reviewed In The Investment Appraisal
Primarily, the process seeks to ascertain compliance with core legislations, such as the Financial Services & Markets Act of 2000. The review expects to see an independent legal opinion on the proposition's collective investment position. That legal opinion should also consider FCA update PS13/3 on Unregulated Collective Investment Schemes, Close Substitutes and Non-Mainstream Pooled Investments.
Among other standard priorities, the review will check whether:
- The asset in question cannot be defined as taxable property.
- The investment can be liquidated or assigned in short order in the event of death.
- There is an independent valuation available at the time of the investment transaction, and a suitable valuation mechanism in place going forward.
As part of the commercial risk assessment, the review shall seek to clarify the credentials of every entity involved in the investment process, directly or indirectly, including director and shareholder background checks. The investment vehicle in question shall be assessed in detail and any assets such as land and property will be verified as correctly registered and without unexpected encumbrances. The review may seek independent legal advice of its own to verify the presence of any liability, the enforceability of the investment contracts and potential for default.
It remains the responsibility of the investor’s adviser to judge if the product is a suitable investment for its client, although the feasibility and contract packs will be checked for aspects such as exit strategy, income projections and security. If there are issues identified which are to the investor or the SIPP operator's potential detriment, they will be raised and documented. Changes, conditions or even restrictions may then follow.
Contracts should reflect the investor as a SIPP, rather than an individual. They should ensure all notifications relevant to the investment shall be sent to the SIPP operator, who must have complete visibility over all decision making and any process to exit the investment. Contracts must also be structured to reflect joint signatories (SIPP Client and SIPP Operator) with protective covenants to prevent either joint signatory acting independently of the other.
The review and reporting process is multi-layered. Once each review has been compiled by the SIPP operator's due diligence team, its product committee will review the results of each completed report. During this meeting, the committee will agree on conditions to be applied to each product in order for investment to be accepted (much like setting an insurance policy). Quite often, further queries will be raised meaning certain aspects must be revisited before sign-off can take place at subsequent meetings.
Meeting The Required Standards
Each product submitted for review could potentially be seeking to unlock tens of millions of pounds of SIPP investment. As a consequence, the delivery of the proposition and its associated due diligence resources must be of the highest professional standard. There should be an investment document, regulated or unregulated, which provides a clear description of the proposition and the investment process. This should not be just a market feasibility report or glossy brochure.
The potential investor should have a clear understanding of the reason for the investment raise, the path their investment funds are to follow, clarification of the associated risks and a clear description of security in their favour and how that security would be activated in the event of default, however unlikely.
There must be a documented Legal Opinion provided with every submission, or a QC Opinion if necessary, which offers a comprehensive statement on the entire investment structure’s compliance with the latest relevant legislation. This must be specific to the product or project in question and not be an ‘off-the-shelf’ generalisation about how an investment model should ‘theoretically’ work on a project-by-project basis. Should the Legal Opinion received be deemed insufficient, updates, or a QC Opinion may be requested before the review is taken any further.
If a product is overseas, the due diligence resources should still reflect the market being targeted for UK investment. A document may appear to be genuine but if it’s in another language and in an overseas jurisdiction, this process cannot reasonably be expected to determine its content, relevance and authenticity with absolute certainty. As well as providing a legal opinion in relation to UK regulation, the product promoter is also expected to provide documented Legal Verification in English from a lawyer in the country of jurisdiction, verifying items such as good title, planning approval, company incorporation, commercial licences, and so on. The lawyer’s credentials will then be verified at a relevant national bar or similar association.
The Resources You Will Need To Provide
At the heart of SIPPclub's SIPP Accepted Service is a Presentation Pack of the promoter's documents.
Many opportunities fail to be accepted by SIPP operators, simply because the promoter fails to satisfy the due diligence requirements of the SIPP operator. Others are not acceptable because of the sectors in which they operate. Until further notice, we're not accepting submissions for overseas based Forestry, Agricultural, Bio Fuel and other such investments.
As a minimum, items in the first table below should be submitted by the promoter, subject to the nature of the proposition in question. Other resources may be requested, depending on how the review proceeds.
The following additional documents are required, depending on the type of investment. The items marked in bold are the essential resources required. The other items are secondary resources which are only required where appropriate.
SIPPclub SIPP Accepted Service In Practice
Working only with well respected, long standing SIPP operators, experienced in the area of non-standard investments, this is how the service works:1. Based on the tables above, the promoter will send to SIPPclub all the relevant documents, to ascertain whether the investment is likely to be SIPP Accepted. 2. If the above point is positive, SIPPclub will email to the promoter an Investment Submission Form. 3. On receipt of the completed Investment Submission Form, together with payment of £2,000 plus VAT, a full Presentation Pack will be created and delivered to a relevant SIPP operator. 4. SIPPclub will liaise with the promoter and the SIPP operator over the coming six to eight weeks of the review process, to ensure all additional requirements are delivered in a timely manner. 5. Providing acceptance looks likely, the SIPP operator will arrange a meeting with the promoter as the final part of its due diligence process. 6. If the opportunity is rejected, reasons will be given and suggestions made on how it could be turned into a SIPP acceptable opportunity, if possible. 7. If the opportunity is accepted, the promoter will be able to inform its clients and its network of advisers and introducers that the investment is an acceptable asset for a SIPP. 8. The promoter will be permitted to carry the SIPPclub SIPP Accepted logo, shown above, on its marketing materials, although it will need to be removed if the opportunity subsequently has its acceptance withdrawn by the SIPP operator for any reason. 9. SIPPclub may decide to feature the opportunity on its SIPP Investments page and/or include details of it within its weekly newsletter, subject to its own due diligence.
The Cost Of The Service
The service costs £3,500 plus VAT. That's a fraction of the funds that could be attracted by having access to the billions invested in SIPPs.
The fee will only become payable once the Presentation Pack is complete and ready for submission to the SIPP operator. Promoters should be aware that payment of the fee does not guarantee SIPP acceptance. Once the Presentation Pack has been submitted, no refund will be available, whatever the outcome of the review.
The review is an internal quality control process by a SIPP operator. As a result, the documents it produces as a result of its due diligence investigations are not available for public inspection, or inspection by the promoter. The result, whether positive or negative, will be communicated to the promoter, with reasons for rejection, as necessary. As this is an internal process, neither SIPPclub nor the SIPP operator can be held accountable for any errors or disputes which arise in relation to the documents supplied or the data contained within them.
Whilst the investment can legitimately claim to be SIPP accepted, it follows that it's only acceptable to the SIPP operator who has undertaken the review. Other SIPP operators will need to carry out their own due diligence to confirm acceptance for their SIPPs. However, evidence reveals that once one SIPP operator has confirmed acceptance, other SIPP operators will tend to follow suit.
Have Your Investment Reviewed For SIPP Acceptance Now
Once you have all the documents required in the tables above to enable us to create your Presentation Pack to submit to an appropriate SIPP operator, please get in touch using our contact form to discuss having your investment SIPP accepted.
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Over time, charges can wipe out a huge part of your fund. We like AJ Bell because there are no set-up costs. If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund. And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment). However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.
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As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment within it is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk. Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.
Please read our full Terms which includes criteria for SIPPclub membership.