Sipp operators are to be subjected to yet another thematic review. Aside from waiting on the final capital adequacy ruling – which could quite easily put a good chunk of the industry out of business – they will now be scrutinised to see if they paid attention to the last thematic review.
For all those good Sipp operators out there, a sense of injustice must be prevailing. If you’re doing a decent job, it must be wearing to have to justify yourself to the regulator.
That said, we know that the Sipp market is something of a cottage industry. And that just can’t continue. If I knew the bloke next door had a few thousand in his back pocket, that would not make me trust him to look after my retirement savings. But, at the moment, relaxed rules for Sipp operators allow pretty much that to happen.
Now being small does not mean you’re badly run, unprofessional or running a dodgy single Ucis-plugging Sipp. A big provider could be equally as rubbish in a different way and, with many more clients, the fallout would be a lot more severe.
But the fragmentation of the industry does make it hard to get a firm grasp on who is behaving and who isn’t. Every six months, we survey the industry and managed to get about 60 firms to reply to us. Yet we know there are about twice as many out there somewhere, some of whom we struggle to even verify the existence of.
And so the thematic review (again) makes us question what Sipp providers are hiding. The last one gave a pretty hard slap on the wrist for operators, with everything from management to handling of client money criticised. That’s before we even start looking at the obscure investments some of them were allowing, while closing their eyes and pretending if they didn’t look too closely then it wasn’t really anything to do with them.
Capital adequacy and operator standards are separate issues but they go hand in hand. Running a responsible Sipp doesn’t mean holding the bare minimum and allowing all investors to do whatever they please. It’s about structure, due diligence and going beyond what the regulator wants – not because you have to, but because that’s what protects clients, assets and advisers.