SIPPs firms in turmoil over ‘best advice’ ruling by FSA
The SIPP pension market is in turmoil as the Financial Services Authority puts pressure on smaller firms to clean up their act and become more responsible to customers.
The confusion lies with SIPP providers taking the view that the financial advisers recommending the product have responsibility for making sure the SIPP was suitable for the customer - but the FSA says this is a misinterpretation and the provider must take on this responsibility.
This misconception was revealed by an FSA investigation in to 60 small SIPP providers and was stated in a letter to all the SIPPS providers involved sent out last month.
Now some SIPP experts are predicting consolidation in the market because many of the smaller providers do not have the resources to manage their service to FSA standards.
Suffolk Life marketing director John Moret explained what is happening in an interview with trade publication Money Marketing.
He said: “There will of course always be a place for the true bespoke SIPP but I believe the regulatory overhead is becoming so great that many of the smaller operators will struggle to meet the FSA’s requirements.
“I also believe that the three prerequisites for succeeding as a SIPP operator are experienced management, a scalable IT platform and access to capital or financial strength. I think many of the small providers would fall down on one or more of these criteria and I think this is borne out by the comments in the FSA’s review.
“I remain convinced this will lead to consolidation of providers over time. One can debate whether this is a good thing. However the messages in the FSA’s paper are very clear and SIPP operators ignore them at their peril.”
”Fifty of the 70-odd SIPP operators around are running SIPP portfolios of less than 2,000 contracts. I have always regarded that as the rough threshold indicator for long-term viability of a SIPP provider.
“Many smaller SIPP providers started out as SSAS administrators or trustees and there is a world of difference between running a small number of SSAS’ - which are not subject to the same FSA regulatory over head as SIPPs - and a SIPP portfolio. This is where the problems lie.”
Whatever your financial goals or aims, seeking professional highly regulated advice as early as possible from Qrops Adviser, is the first step in securing the best possible life in retirement. Contact us via the contact Qrops Adviser page, call us direct on 0032 (0)2 400 0087 or email us at info@qropsadviser.com.
