Sipp investors ‘forced into less-regulated alternatives’
The head of product and business development for London & Colonial argued that the regulator’s focus on Sipps could lead to advisers recommending small, self-administered schemes and qualifying recognised overseas pension schemes instead.
This could unwittingly compromise the regulator’s objectives of “potecting against client detriment”, Mr Wrench said, as the FCA does not regulate Ssas and Qrops.
He said: “The increased workload required in order to comply with the FCA’s new disclosure requirements – not to mention those associated with capital adequacy – will lead to an increase in the costs associated with Sipps, which in turn will result in an uneven playing field when compared to Ssas and Qrops.”
While Mr Wrench did not propose that the FCA oversee Ssas and admitted this wasn’t possible for Qrops, he called for “clarity and a consistent approach” across all self-investment pension options.
He supported the proposal put forward by various industry figures in recent months to make a regulated scheme administrator a legal requirement for Ssas.
He also said that similar disclosure requirements for Sipps should have been factored into the recently introduced extended reporting requirements for Qrops.
London & Colonial provide all three types of Sipp.
Steven Robinson, managing director of Bristol-based Clarke Robinson & Co, said: “HMRC should be clamping down on Qrops, because the sales messages being put across by non-regulated companies in foreign countries are taking advantage of people not under the jurisdiction of the FCA. Ssas possibly being used as a route for pension liberation but it’s up to HMRC to make it less easy for people to set up a Ssas. But I’m not in favour of kneejerk reactions aimed at consumer protection that creates more trouble in the long-term.”
Meanwhile, HMRC is reviewing its policy on Qrops after it withdrew from a legal case brought by pension holders in the recognised overseas self-invested international pension Qrops. The taxman previously intended to make policyholders pay a 55 per cent tax bill after it removed the scheme from its list of approved Qrops schemes in May 2008. The Right Honourable Sir William Charles, known as Mr Justice Charles, gave HMRC 21 days to set out a new approach to defining Qrops.