Pensions  

Sipps firms call for return to ‘permitted investment list’

Providers of self-invested pensions and small self-administered pensions would like to see a return of the pre-2006 ‘permitted investment list’ that specified which investments could be placed into a member-directed pension.

At a conference hosted by trade body the Association of Member-Directed Pension Schemes delegates were asked if they would like to see a return to a strict ‘permitted investment list’, such as that that existed for self-invested personal pensions prior to A-Day, with more than two-thirds responding that they would like to see such a list implemented.

Speaking to FTAdviser, Neil MacGillivray, James Hay’s head of technical support and recently appointed Amps’ chairman, said: “I think the reasons are obvious why. Ssas’s are concerned about regulation. What the FCA should be regulating is open to debate, but will a return to the list reduce the problems we are seeing?

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“My own personal view is that a return to the list would be quite a good thing. It could be seen as a backward setep but we said it’s about market-manipulating people taking advantage and the outcomes are not good for the industry at all.

“This is maybe time to reconsider a return: in this day and age, caveat emptor has died, if an investor makes a decision that turns out badly, they will be looking for recourse.”

Recent scandals in the sector relating to esoteric investments that have been held within Sipps, such as overseas property firms Arck LLP and Harlequin Property, or biofuel investment firm Sustainable Growth Group, have brought attention once again to business placed through Sipps.

In the wake of two cases hitting headlines last year several providers spoke to FTAdviser and gave conflicting views as to whether they were responsible for providing a ‘gatekeeper’ role and whether therefore there should be stricter rules on what is able to be placed in a Sipp.

Billy Mackay, marketing director at AJ Bell, previously told FTAdviser that his firm was in favour of a return to a ‘permitted investment list’, adding that re-inforcing this list could be a way of mitigating risks for clients, advisers and providers.

A recent Pensions Ombudsman ruling did not uphold a complaint made against Standard Life over an apparent failure to undertake sufficient due diligence in relation to Arm life settlements bonds investments in 2009.

However, deputy pensions ombudsman Jane Irvine pointed to tougher regulation that has been in place since 2012 against the provider.

Earlier this month the Financial Conduct Authority launched its third thematic review into Sipps, which will specifically focus on Sipp operator financial resources, the quality of business Sipp operators allow within their schemes and “operational procedures and controls”.