PensionsMay 14 2013

Hornbuckle boosts reserves ahead of FCA capital ruling

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This year will be a “cautious” one for self-invested pensions as providers prepare for new Financial Conduct Authority capital rules, which are set to significantly increase the amount of capital reserves held by providers, according to Hornbuckle Mitchell.

In its results for 2012, the provider of self-invested personal pensions and small self-administered schemes said it had increased its capital reserves to 180 per cent of the level demanded under current rules, which will equate to around 120 per cent of that required under new rules that are expected to come into force by 2014.

It added that it expects a number of its rival firms to be “reluctant to deal with financial advisers and clients wishing to invest in non-traditional assets” due to the coming changes, which it predicted could be a boon for business in the future.

The FCA published a consultation paper in November last year that proposed increasing minimum capital reserves from £5,000 to £20,000. Reserves will then need to be increase according to a new tiered structure that will require more capital to be held against ‘non-standard’ assets, including controversially commercial property.

A policy statement confirming the new rules was expected to be published last week, but has not yet materialised.

FTAdviser exclusively revealed last week that the FCA has, however, sent a request for information to Sipps firms seeking information on all aspects of their businesses, with a particular focus on the types of asset class available for investment and amounts invested in each case.

According to its results, revenue at Hornbuckle Mitchell was £12.1m, up 5 per cent from approximately £11.5m the previous year. Assets under administration at the company also rose slightly and are now in excess of £4bn.

Phil Smith, chief executive officer of Hornbuckle Mitchell, said: “The performance in 2012 was very robust, particularly in light of headwinds created by the implementation of RDR, the FCA’s thematic review of the Sipp industry, the general economic uncertainties that are prevailing across the UK and Hornbuckle Mitchell’s focus on the bespoke SIPP market.

“Whilst many players will be reluctant to deal with financial advisers and clients wishing to invest in non-traditional products, due to the likely changes in regulatory capital, we have the expertise and capital base to welcome such business where it is of the right quality.”