Opinion  

Just why is the FCA republishing four-year old guidance?

Michael Trudeau

The Financial Conduct Authority just did something a bit weird.

The regulator published a finalised guidance paper for operators of Self-invested personal pensions on its website, covering a variety of issues from financial crime controls and client money segregation.

At first I thought it might be the long-awaited and hotly-anticipated final capital adequacy rules, so I quickly downloaded the pdf and began scanning through it looking for juicy tidbits.

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Except, wait a moment. The newly-published document says that the guidance is exactly the same as that previously published in September 2009 following a thematic review conducted in the aftermath of new “regulatory responsibilities that became a requirement in April 2007”.

It states the guide “has been updated to give firms further guidance to help meet the regulatory requirements”. OK, could still be newsworthy: amended guidance is always news.

Except, a spokesperson for the regulator confirmed there is nothing new in this document. At all.

A separate spokesperson - we called twice, just to be sure - very helpfully pointed me to the section of the accompanying ‘responses to feedback’ document labelled “Changes made...as a result of feedback received”. It says, twice, that the regulator will make no changes to the guidance material.

So let me get this straight: on the one hand the guide says it has been updated to help Sipp operators better understand what is required of them, but on the other that update consists of zero changes.

Why? It’s an odd move.

Well, there are a couple of potential reasons. First, there has been a fresh review since the original thematic review conducted following the April 2007 changes. Nothing much has changed and no new failings have been identified, the FCA confirmed to FTAdviser.

Second, the final guidance on new capital adequacy requirements for Sipp operators is due later this year, so potentially this could be a preamble to that.

Beyond that, in May the FCA launched a new investigation into Sipp providers in advance of the new cap ad requirements and that also sought to elucidate more on cash account rates that many say are used to boost profits.

Stricter rules for disclosure came into play in the spring to address serious failings uncovered by the regulator, such as poor disclosure documents and instances where consumers had been switched into Sipps unnecessarily thereby incurring extra charges.

Some argued that despite the new rules Sipp providers would continue to obfuscate how much interest they retained from cash accounts, with research showing some providers generate 40 per cent of their revenue from withheld interest.

It’s even been branded the “next mis-selling scandal” by some. It’s not the first time the mis-selling spectre has been raised in relation to Sipps: the above-mentioned churning concern also saw some apply the label as long ago as May 2011.