A way to go: MM Sipp survey October 2013

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Self-invested Personal Pensions – October 2013

All self-invested personal pension (Sipp) providers are waiting with baited breath for something that keeps getting further away. The FCA was expected to release an update on its capital adequacy proposals around September; the latest update from the regulator now puts the proposed publication date at November, adding another few months of uncertainty to providers large and small.

But time does not stand still. Sipp business has been going on as usual – clients do not stop saving simply because the regulator is planning changes.

And the stream of Sipp books being sold has not stemmed since our last survey in April. Since then, Dentons has acquired 650 plans from RSM Tenon, Suffolk Life has acquired the Sipp books of Origen and Pearson Jones (400 and 280 plans respectively), and City Trustees, a subsidiary of Mattioli Woods, has taken over Ashcourt Rowan’s 750-strong book.

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How much of this is the normal course of business and how much is prompted by potential capital adequacy concerns is unclear. There are undoubtedly some firms out there feeling rather anxious about what might happen if they cannot meet the requirements, however the calculation turns out.

Sipp providers are coming under the microscope in more ways then one. The FCA has been making noises in many areas of the market since its inception, and Sipps are not exempt. In April, the regulator censured senior management of a Sipp operator for the first time, banning Kevin Wells, managing director of Montpelier Pension Administration Services, from performing any ‘significant influence function’ at any regulated firm. He would have been fined £58,500 except that it would have caused significant financial hardship, with his actions described as a “how-not-to guide” for running a Sipp firm.

In addition, the FCA has been sniffing around Sipp providers, asking how they operate, what their due diligence processes are, how their processes work. No provider has reported feeling ‘watched’, rather that the regulator is trying to get a better understanding of how firms of all sizes work to influence their thinking.

“They may well come out with wanting to regulate different parts of the Sipp market: this is what we do for the big ones and this is what we do for the smaller ones,” says Alastair Conway, chief executive of James Hay. “The larger you become, the more corporate you become in your approach. Good practice will have become commonplace. Smaller firms will be more diverse.”

Movers and players

While further consolidation is almost certain to materialise, for now the Sipp industry continues as always. This survey covers 53 operators and a total of 74 plans. Absentees compared with the last report – JP Morgan, Nucleus, Pilling & Co, TD Direct, Walker Crips and Zurich – all cited time and resource issues for being unable to complete the survey. Friends Life has rejoined the survey with information on its workplace Sipp and Ashcourt Rowan no longer participates since its acquisition. Figures for this book are not yet included in City Trustees’. Aegon has cut down on the number of plans it reports on, choosing to only provide details on Aegon Retirement Choices and One Retirement. Not including its older products significantly impacts the total Sipps, particularly in the insured Sipp space, as shown later.