FCA should beware of Sipp over-regulation, says Tilley

Following the regulator’s announcement earlier this month that it was set to embark on its third thematic review of Sipp operators, the director of technical services at specialist pension provider Dentons, said: “We want appropriate regulation, not something that is excessive.”

In a letter to operators earlier this month, the FCA said its concerns over the potential risk of consumer detriment for Sipp investors “had not gone away”, and warned it could pursue regulatory action against operators who did not meet their responsibilities.

Mr Tilley said: “We hope that the FCA brings in a regulatory benchmark, but it is a little disappointing that that the last two thematic reviews did not resolve any issues.

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“We have to be careful that any additional controls don’t increase costs, which could then become a burden to operators and be passed on to consumers.”

With the FCA paying particular attention to the quality of business within Sipp schemes, Mr Tilley added that Dentons undertook rigorous due diligence and had declined 260 investments since 2011, accepting just 100.

He said: “We initially treat all marketing literature for prospective schemes as false, and begin our due diligence from that stage.

“We also take the threat of pension liberation schemes very seriously, and believe there should be tougher legislation. Ultimately, while 95 per cent of the industry has done everything right, a minority has ruined it.”

Dentons key facts

• Assets under management: £2.4bn

• 3400 Sipps

• 710 Ssas

• Average Sipp size £400,000

• Minimum Sipp size £50,000

• 32% of Sipp book is invested in commercial property

Adviser View

Steven Robinson, managing director of Bristol-based Clarke Robinson, said: “The Sipp provider market is very diverse: some are slick and some are inefficient, but to be honest I don’t have much sympathy for the parts of the industry that haven’t cleaned up their acts.

“However, I would agree with the need of a balanced regulatory view that doesn’t strangle the sector.”