This case study is an anonymised composite based on publicly reported PI claim patterns. It is not actual Apex client data and does not constitute legal or insurance advice. Names, locations and identifying details have been changed. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FRN 724952.
A three-adviser IFA practice in the north-west, regulatory revenue around £1.1m. The firm’s bread-and-butter work was traditional retirement planning for mass-affluent local clients; in 2014–2017 it took on a small number of cases involving Self-Invested Personal Pensions (SIPPs) holding non-standard assets, on referral from an introducer who specialised in alternative investments.
The client, then aged 52, was a small business owner with a £180,000 personal pension transferred from an occupational scheme. He was introduced to the firm by an unregulated property introducer. The proposition was that he would transfer his pension into a SIPP with a SIPP operator and the SIPP would invest in shares in an overseas holiday-resort development. The expected returns were attractive; the asset was illiquid; the SIPP operator accepted the investment within its permitted asset list.
The firm’s adviser met the client once. The fact-find identified him as an experienced investor on the basis of his ownership of a small portfolio of buy-to-let properties. Attitude to risk was assessed as “balanced” with a “willingness to consider higher-risk strategies for a portion of the portfolio”. The advice letter recommended the SIPP transfer and the allocation of 100% of the pension into the overseas resort investment, on the basis that the client had sufficient other assets and his stated objective was capital growth.
The overseas resort failed within four years. The SIPP holding became worth a fraction of the original investment. The client was left with a depleted pension at a point in his life when he had limited capacity to rebuild.
The pattern is one the FCA has been transparent about over a number of years, and the leading case in this area — Adams v Carey Pensions UK LLP [2021] EWCA Civ 474 — went the other way on the question of SIPP operator liability under section 27 FSMA, returning the focus squarely to the introducing IFA where one had been involved. The FCA’s earlier alert and the FOS decisions on similar fact-patterns made the suitability analysis difficult to defend.
The client complained to the firm, then to the FOS. The FOS upheld the complaint, applying the COBS 9 suitability framework as it stood at the time of the advice and the Conduct of Business rules around the suitability of high-risk and illiquid investments for a client whose actual investment experience was limited to direct property ownership. The redress was assessed using the FOS’s standard methodology for SIPP unsuitable-advice cases: comparison with what would have happened had the original occupational pension remained in place, adjusted for the residual value of the SIPP and applicable interest.
Quantum was approximately £195,000.
The firm faced parallel claims from another two clients on closely similar facts. Both were referred to the firm by the same introducer in the same period. The aggregation question was now live.
Section 5 notification was made on receipt of the first FOS complaint. The wording responded subject to the firm’s £15,000 each-and-every excess. The £2m limit was sufficient.
The aggregation issue was the focus. The wording in place at the relevant time defined a “claim” as “all losses arising from a single act, error or omission or series of related acts, errors or omissions” — language that, on the facts, captured a meaningful number of the firm’s SIPP-into-resort recommendations as a single series. The insurer initially argued for series-aggregation across all the affected clients; the firm’s coverage counsel argued for separate treatment on the basis that each was a separate fact-find, separate suitability assessment, separate decision. The case law — particularly the analysis in Lloyds TSB v Lloyds Bank Group Insurance Co Ltd [2003] UKHL 48 (the well-known authority on aggregation language) — was central. The matter resolved in favour of multiple claims for limit purposes but a shared excess application as a practical solution.
A further coverage point arose on the FOS award trigger. The wording in place explicitly responded to FOS-determined awards and the related complaint-handling costs.
There was a discussion about section 3 Insurance Act 2015 disclosure. At the renewal preceding the first complaint, the firm had disclosed the existence of the SIPP book but had not flagged any anticipated complaints. On a careful review there had been no actual or constructive awareness of a probable claim at the renewal date. The insurer accepted the position.
The three claims settled by FOS award and combined at approximately £570,000 inclusive of interest.
The firm paid the FOS-determined awards (with the policy responding). A past-business review was commissioned covering all SIPP recommendations made during 2014–2018; a further nine cases required some form of remediation, all within the policy limits across the relevant policy years.
The firm’s PI premium more than doubled at the first renewal post-claim; the excess rose materially. The firm ceased to advise on SIPPs holding non-standard assets — a decision it should have made earlier — and retains only mainstream investment work. The introducer relationship was terminated. The firm continues to trade.
SIPP-into-non-standard-asset cases are the defining IFA PI claim pattern of the past decade. First, an attitude-to-risk assessment that maps to traditional retail asset classes does not authorise allocation into illiquid, single-asset, exotic investments — those require their own suitability analysis and, in most cases, will not pass it for a client whose other investment experience is limited. Second, introducer relationships should be subject to the same due diligence the firm applies to any other counterparty; the firm carries the regulatory and PI exposure, not the introducer. Third, the aggregation wording on the firm’s PI policy needs to be analysed carefully — a “series of related acts” wording can be the difference between a manageable claim and a catastrophic one across a SIPP book. Fourth, run-off cover after a firm ceases to do this kind of business needs careful calibration; complaints often arrive years after the underlying advice. Fifth, the FOS published decisions in this area are the single best preparation for any firm with a SIPP book; the pattern of FOS reasoning is consistent and predictable.
We approach the IFA market with a clear view of which insurers can underwrite SIPP-exposed firms intelligently. On notification, we work with the firm’s coverage counsel to navigate the aggregation analysis early — getting that right at the first claim sets the framework for all subsequent claims in the same series. Past-business reviews benefit from broker involvement because the structuring of the review (scope, methodology, redress calculation) affects the policy response. At renewal, the credible firms in this space have a defensible past-business position and a clear ongoing risk profile — we help articulate that to underwriters with the level of granular detail that earns the rating concessions.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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