Specialist Investments (also known as Non-Standard Investments)

Transcription

1 ADVISER FACTSHEET Specialist Investments (also known as Non-Standard Investments) IMPORTANT NOTE New Non Standard Investments on SIPP products are no longer possible (excluding SSAS). However, we will consider top-ups to existing holdings on SIPP products. Please see our website at for further details. Background The James Hay Partnership approach to specialist investments is kept under regular review in light of changing regulatory and industry developments. In line with the FCA s Principles for Business, we endeavour to provide industry leading skill, care and diligence with respect to our administration of specialist investments. We do not provide financial advice. For professional advisers only

2 Since 2007, when SIPPs first became regulated by the Financial Services Authority (now the Financial Conduct Authority), the regulatory environment has become increasingly focused on the performance of due diligence checks before acceptance of a specialist investment, and the ongoing monitoring of those investments. Although SSASs are not regulated by the FCA, it is James Hay s policy to operate on a best practice basis and to apply the same criteria for specialist investments to the assessment of potential investments for both SIPP and SSAS. Due diligence review prerequisites Non Standard Investments into SSAS and topups to existing SIPP Non Standard Investments, will only be considered if we receive sufficient evidence that a Financial Conduct Authority (FCA) regulated financial adviser has recommended the investment and where applicable, promoted it. In-specie transfers and mandatory corporate actions are exempt from this policy and are not required to be advised, however, these will be subject to our specialist investment due diligence process. The proportion of a client s SIPP invested into specialist investments on an advised basis is limited to 40% of the total value of their SIPP held with us at point of purchase. (Note: SSAS secured loans can be up to 50% of the total value of the SSAS.) We will only accept an investment if the client is eligible to invest in their own right. We will only review an investment if there is a current or prospective client looking to invest. We will not accept any form of taxable property into a SIPP/SSAS (e.g. residential property, tangible moveable property etc.) If an investment is made into taxable property, significant tax penalties will be incurred by the client. James Hay Partnership approach to SIPP and SSAS specialist investments We have a dedicated Specialist Investments Team to process all new investments. This team can be contacted directly on or jh.specialistinvestmentsupport@jameshay.co.uk All new SSAS investments and SIPP top up investments are subject to internal due diligence review by our Specialist Investments Team. Potential investments are reviewed against various criteria including whether they may be regarded as taxable property; they are legitimate investments; they can be objectively valued; they can be held securely; and are deemed appropriate for a pension scheme to hold. Formal recommendation in this respect is made to our Investment Committee (chaired by the Chief Finance Officer), which meets weekly. Clients should allow approximately three weeks for an accept or reject decision on an investment proposal (after all the supporting information has been received). Approval by us does not mean the investment is suitable for a client s personal circumstances this is for the client and their financial adviser to decide. Our acceptance of an investment must not be misconstrued as advice in any way and does not validate any projected investment returns or statements made by the investment promoter. Specialist investments are typically higher risk investments and the value of the capital invested can fall as well as rise. Commercial property this follows a separate process that is administered by our dedicated Commercial Property Team (please visit our website for details). 2

3 The following table sets out at a high level our stance when considering specific specialist investments. In all cases, the particular investment will still be subject to the outcome of our full review and may not be accepted. Investment type Approach Documentation likely to be required Non-Mainstream Pooled Investments (NMPIs) Unquoted shares Our approach reflects the new rules introduced by the FCA with effect from 1 January This includes Unregulated Collective Investment Schemes (UCIS) and Qualified Investor Schemes (QIS). We will only accept NMPIs where the adviser has both promoted AND advised the client to invest. For existing holdings, any top-up investments would be subject to the above requirement. The underlying member must be eligible to invest in their own right (as we only act as bare trustee). The fund or investment structure must be a Genuinely Diverse Commercial Vehicle as per HMRC definition. Investment must be recommended by an FCA regulated adviser. The SIPP/SSAS in combination with any connected parties cannot end up owning 20% or more of the following: the share capital of the company the voting rights of the company rights to the company assets in the event of liquidation. Where applicable, independent valuation required supporting the acquisition price of the shares. We need to understand how the client became aware of the investment in case of inappropriate promotion. More detailed requirements apply where the shares are not in a UK company i.e. an independent, professional third party (e.g. a law firm) in the applicable jurisdiction should be appointed to conduct due diligence on the proposed investment. This may (by way of illustration) include a site visit, meeting the directors of the company and production of a report which should include James Hay as an addressee. The cost of this report will be borne by your client. Fund prospectus. Investment provider s questionnaire. Application forms for investment. Any promotional material received. Evidence of promotion and recommendation from the adviser. Unquoted Share Questionnaire (SSAS) or Unquoted Share Questionnaire - Top-Up (SIPP). Financial accounts for the last two years. Memo and articles for the company. Shareholders agreement (if applicable). Subscription agreement (if applicable). Business plan (if start-up company). Annual independent valuation of shares. Evidence of recommendation from the adviser. 3

4 Investment type Approach Documentation likely to be required Top up or rollover of SIPP secured loans to unconnected parties, and SSAS secured loans to unconnected third parties Loans to sponsoring employer (SSAS only) Limited & full partnerships We will not make loans which could be covered by the Consumer Credit Act (i.e. not to individuals, partnerships with less than four partners, SIPP to SIPP loans). Loan must be secured by a first legal charge. Aggregate of all loans must be less than 50% of the value of the SIPP or SSAS. Maximum term of five years. No interest-only loans capital and interest repayments must be spread over the term of the loan. Loan must be at arm s length i.e. at market interest rates, terms and conditions. Loan documentation must be reviewed by James Hay Partnership legal if prepared by a third party other than a James Hay Partnership panel solicitor. Security cannot be taxable property as per HMRC definition. Will not make loans which could be covered by the Consumer Credit Act. Loan must be secured by a first legal charge. Aggregate of all loans must be less than 50% of the value of the SSAS. Maximum term of five years. No interest-only loans capital and interest repayments must be spread over the term of the loan. Loan must be at arm s length i.e. at market interest rates, terms and conditions. Loan documentation must be reviewed by James Hay Partnership legal if prepared by a third party other than a James Hay Partnership panel solicitor. Security cannot be taxable property as per HMRC definition. We will not become a partner in a limited partnership investment structure. This includes Limited Partnerships & Limited Liability Partnerships. However, investment may be possible if the proposed investment offers a Unit Trust option that itself invests in the Limited Partnership. We will only invest via the Unit Trust. We will also not become a partner in a full partnership structure. Loan questionnaire. Financial accounts for the last two years. Memo and articles of borrower (if applicable). Evidence loan is on commercial terms. Independent valuation of security by appropriately qualified valuer (including forced sale valuation). Loan questionnaire. Financial accounts for the last two years. Memo and articles of borrower (if applicable). Evidence loan is on commercial terms. Independent valuation of security by appropriately qualified valuer (including forced sale valuation). Refer to NMPI section for the required information for the Collective Investment Scheme fund. 4

5 Unacceptable assets We do not accept these forms of investment: Intellectual property Land banking Overseas commercial property Peer to peer lending Crowdfunding Residential property Commodities Connected loans (SIPPs only) Unsecured loans Investments considered to be personal chattels Carbon credits Storage pods Any taxable moveable property Please note: This list is not exhaustive. We continuously monitor FCA, Action Fraud, HMRC and various other agencies to highlight high risk and suspicious assets/investment types. Further information If you would like to find out more about our products and services please contact your local Business Development Manager or call us on (General enquiries) (Specialist Investments Team) James Hay Partnership is the trading name of James Hay Insurance Company Limited (JHIC) (registered in Jersey number 77318); IPS Pensions Limited (IPS) (registered in England number ); James Hay Administration Company Limited (JHAC) (registered in England number ); James Hay Pension Trustees Limited (JHPT) (registered in England number ); James Hay Wrap Managers Limited (JHWM) (registered in England number ); James Hay Wrap Nominee Company Limited (JHWNC) (registered in England number ); PAL Trustees Limited (PAL) (registered in England number ); Santhouse Pensioneer Trustee Company Limited (SPTCL) (registered in England number ); Sarum Trustees Limited (SarumTL) (registered in England number ); Sealgrove Trustees Limited (STL) (registered in England number ); The IPS Partnership Plc (IPS Plc) (registered in England number ); Union Pension Trustees Limited (UPT) (registered in England number ) and Union Pensions Trustees (London) Limited (UPTL) (registered in England number ). JHIC has its registered office at 3rd Floor, 37 Esplanade, St Helier, Jersey, JE2 3QA. IPS, JHAC, JHPT, JHWM, JHWNC, SPTCL, SarumTL, IPS Plc, PAL, STL, UPT and UPTL have their registered office at Dunn s House, St Paul s Road, Salisbury, SP2 7BF. JHIC is regulated by the Jersey Financial Services Commission and JHAC, JHWM, IPS and IPS Plc are authorised and regulated by the Financial Conduct Authority. The provision of Small Self Administered Schemes (SSAS) and trustee and/or administration services for SSAS are not regulated by the FCA. Therefore, IPS and IPS Plc are not regulated by the FCA in relation to these schemes or services.(06/17) JHP 0060 MAY17 (11/17) LD