IFAs seek more diligence on Sipp providers
IFAs are ramping up the level of due diligence they carry out on Sipp providers, after the Financial Services Authority (FSA) began investigating around seventy firms.
Last month, the regulator said it is conducting a review of around 70 Sipp providers, to assess whether they are "adhering" to its principles and rules. (See article.)
Now, the IPS Partnership, a Sipp and Ssas provider, has received backing for its call to IFAs to undertake extra due diligence on any product provider they recommend to their clients.
It says over 20 per cent of more than 1,000 IFAs contacted by IPS in the last week, including members of networks, have asked for further guidance on nature of the due diligence required when assessing a Sipp provider, despite the fact the regulation of Sipps came into force in April 2007.
IPS is now offering any IFA that has introduced business to the firm, or is thinking of doing so, a comprehensive due diligence pack covering all the information gathering expectations of the FSA, including a checklist.
The checklist covers the quality of systems and controls, administration procedures, T&C regimes and management information, the financial strength of the organisation and how Sipp accounts are administered amongst other details.
Commenting, business development director at The IPS Partnership, Richard Mattison, said: "The importance of carrying out robust due diligence has been highlighted this year and serious concerns about small Sipp providers have been documented.
"As a result of concerns, the FSA has formed a special squad to investigate the operations of the smaller Sipp providers as the FSA feels they do not have the resources to maintain their operations to the required standard.
"The big question is: 'Can IFAs continue to entrust their clients’ Sipps to these providers that run Sipps in a manner reminiscent of an old fashioned cottage industry?"
