Table 1 outlines the core details of participating Sipp providers, including minimum investment requirements, current capital regime and whether there are any links to platforms. It also identifies whether online valuations are provided, with a surprisingly high number – almost a quarter – still not offering them. Whether it is appropriate to offer this clearly depends on the type of Sipp offered, since it is more difficult to provide an instant valuation for certain bespoke assets. Every plan that does not offer online valuations, with the exception of the Taylor Patterson Cash Sipp, is in fact bespoke.
The Table also shows whether a Sipp is simple, mid-range or full-range. As there are no official definitions, these figures are based entirely on Sipp providers’ own views on what their Sipp is. As broken down in Chart 1 there are eight simple Sipps, 19 mid-range and 48 full-range Sipps on offer. This does not necessarily reflect investors’ experience of Sipps; it is perfectly possible for a bespoke Sipp to be used in a simple way if, for example, only funds are selected for investment.
Chart 2, on the other hand, shows the breakdown of Sipp type by the number of plans held in relation to each, drawing data from Table 2. Several providers would not break down their Sipps into each type, hence a large ‘unclassified’ section. But comparing the data we do have, it is interesting to note that the proportion of full-range plans available is far larger than those actually taken out, giving bespoke providers a battle for business.
Defining what category a Sipp falls into is not required, but could prove useful for the industry. Robert Graves, head of pensions technical services at Rowanmoor, said there is a perception with some agencies which review Sipps that bespoke offerings are “better” as they have a greater range. Simple Sipps can be very effective in their own right, he added, and should not be rated lower as they are not setting out to be bespoke. “It would almost be better if there was a way of splitting the market up,” he says.
But drawing lines between providers would inevitably cause problems. “You might get some Sipp providers that are essentially standard but do offer commercial property,” Mr Graves says.
It has been suggested that the regulator could deliberately define the market in light of its views on capital adequacy, but then those in the grey area – particularly those who offer commercial property, the controversially ‘non-standard’ asset defined by the FCA – would have to choose whether to become more restrictive or offer more.
Business as usual?