Talbot & Muir is “actively seeking” to acquire high quality self-invested personal pension books from providers put off by the looming capital adequacy rules.
The provider’s head of technical support Claire Trott said the stringent new rules, due to come into force on 1 September, will require her firm alone to put aside £1m in reserve capital for its approximately 2,500 Sipps.
But while Talbot & Muir is willing to set aside those reserves, she said many providers are not, and are therefore looking to offload their books of business.
Ms Trott said many had already been ruled out, because they were full of “nasty” non-standard investments, but added higher quality books could be found in unexpected places.
“There are quite a few financial advisers, discretionary fund managers or wealth managers out there that have historically run a Sipp book, but with all the capital adequacy rules, they don’t want to stick that money to one side, and that’s the issue.”
She said that, while such businesses probably do have the capital to put aside – stressing these were generally responsible, high-quality businesses – they would rather invest that capital in the core part of their business and sell the Sipps to a specialist administrator.
Another channel, according to Ms Trott, was through existing IFA clients who have historic Sipp businesses, and approaches from the firms themselves.
“Sometimes people will come to us and say, ‘we know you use the same system as us’, that’s always a good start. It’s very easy to then take business in if you use the same system,” she pointed out.
The firm is also “very acquisitive” in the small self-administered scheme space, with many providers also looking to include their Sipps in such a sale.
“The thing with Ssas acquisitions is they tend to come with Sipp acquisitions as well. So you never get quite what you want, but we’re actively looking,” added Ms Trott.
Fellow Sipp administrator Dentons recently told FTAdviser it was also in acquisition talks with a number of businesses looking to offload their Sipp books ahead of the capital adequacy rules.
Simon Torry, a financial planner with SRC Wealth Management, said as yet he had not seen any changes to the Sipp industry as a result of the forthcoming rules, but was “looking for distress signals and upping our due diligence” in anticipation of some providers struggling with the new regime.
He said the move towards consolidation was a “double-edged sword”, stating: “From the point of view of strengthening the business and cutting back on costs, it’s a good thing, but the downside is it reduces competition.
“It would be a shame if there were just two or three providers dominating the market,” Mr Torry added.
james.fernyhough@ft.com
