Offshore self-invested personal pension provider Brooklands has closed its Sipp to new members and opened a new Sipp, to launch at the end of this week, under its IVCM rebrand.
The new Sipp is a joint venture with Heritage Pensions and is available for standard assets only and will be supported by a new website and suite of literature.
Brooklands said in an internal note that due to the increased costs associated with meeting new regulatory requirements going forward, largely associated with non-standard assets, it has decided to consider its position.
The sentiment within the Sipp market is that these increased costs will have to be passed onto clients and Brooklands said that it feels in the long term this could call into question the suitability of the Sipp for its members who wish to hold non-standard assets.
New capital adequacy rules confirmed last year and which come into force in 2016 will require Sipps to hold more assets in reserve to protect against potential failure, with the actual figure based on an assets under management charge with a surcharge for ‘non-standard’ assets as these are more costly to wind down.
Due to the capital adequacy requirements, there has been much speculation around consolidation within the Sipp market, although this has not materialised on the scale expected in recent years.
Recently Mark Smith, a director at Mattioli Woods, told FTAdviser that the Sipp firm is currently having discussions with the regulator about possible solutions for troubled firms.
“Yes we have been approached to take on books - there are a number of Sipp operators that we are having discussions with and some of them are troubled operators and some of them are not.
“The regulator is aware we have done that before and we know how to deal with it.”
He added that there will be firms struggling to raise the capital needed without going to an external source.
“The income they are generating won’t be sufficient to increase the levels of capital so they will need external funding. But if a Sipp operator is struggling why would someone put capital in that business?”
Brooklands said that there are no changes to the current Sipp book for existing members, and it is undertaking a review of pipeline cases however it does not anticipate any issues.
It added it a note that it is undertaking a review of pipeline cases and that the firm does not anticipate any issues.
Simon Burgess, sales and marketing director at Brooklands, told FTAdviser: “We’ve agreed a white label joint venture on the UK Sipp. At the end of this week it will come onto the market, we are rushing applications through.
“The first cases are being written this week. It is a new product that runs along our existing Qrops. The initial interest is positive.”
ruth.gillbe@ft.com
