The Pensions Ombudsman has recently determined that a self-invested personal pension (SIPP) provider should not be under any obligation to verify the suitability of an investment vehicle chosen by a member.


Mr N [1] applied to open a SIPP with Stadia, confirming in his application that he had not sought or received any independent financial advice or any advice from Stadia, and therefore he would not be entitled to remedy through the Financial Ombudsman or Financial Services Compensation Services.

Mr N completed a risk assessment form where he confirmed that he could afford to make a “high risk” investment. However, what he wrote on the form displayed an inconsistent attitude to risk. Stadia pointed this out to him and offered an alternative profile whilst noting that their due diligence was limited to confirming that his selected investments “exist and seem to provide the services described” and that it would “not be liable for any loss that you suffer as a result of your decision to invest howsoever that loss arises”.

Nevertheless, Mr N proceeded to invest £147,900 in non-regulated investments, including £3,900 in an unregulated collective investment scheme known as the African Land scheme. The courts later held that the firms promoting and operating the African Land scheme were unlawfully performing regulated activities.

Following this, Mr N complained to the Pensions Ombudsman that Stadia did not carry out the appropriate level of due diligence in allowing him to invest his SIPP in the African Land scheme.


The Ombudsman ruled against Mr N, deciding that it was not a SIPP provider’s responsibility to conduct extensive investigations into the suitability of investments. The Ombudsman ruled that as trustee and administrator, Stadia’s responsibility was limited to considering whether an investment was listed as permitted by HMRC, which the African Land scheme was. Stadia could have chosen not to make the African Land scheme available to invest in but it was not obliged to do so as “the fact a specific type of investment is available to invest in a SIPP does not confer any suitability on the investment itself”.


The decision took into account Stadia’s legal obligations to Mr N and whether it acted consistently with good industry practice. The Ombudsman determined that the statutory duty of care in the Trustee Act 2000 did not apply as to impose a similar duty as is imposed on trustees of occupational pension schemes to arrange and periodically review investments “would be entirely inconsistent with the purpose of a SIPP”.

The Ombudsman did express sympathy for Mr N’s situation but noted that Stadia had complied with their obligations in this case and therefore the determination stayed consistent with previous determinations on complaints about SIPP investments.


The Ombudsman’s decision here reflects his decision in a previous case, where the Ombudsman also ruled that it was not the SIPP provider’s responsibility to advise on the suitability of investments. However, the Financial Ombudsman has taken the opposite approach in the past [2], albeit it is currently reconsidering its determination in light of fresh evidence which subsequently came to light.

This post was contributed by Hannah Algrafi. For more information, email

[1] Mr N (PO-5881)

[2] Berkeley Burke Private Pension Plan (PO-5670)

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.