Self-invested personal pension (Sipp) providers are to fall under regulatory scrutiny yet again following the FCA’s plan to launch a thematic review.
The regulator wrote to Sipp operators on 8 October notifying them of its intention to review the industry, specifically looking at three areas covered by its last thematic review in 2012:
• Sipp operator financial resources;
• the quality of business that Sipp operators allow within their schemes; and
• the operational procedures and controls in place.
The FCA said it wants to “understand and see in practice” what improvements Sipp operators have made following publication of its previous reviews.
It is natural that the regulator would want to see whether Sipp providers have taken on its guidance. However, Andy Leggett, head of Sipp development at Barnett Waddingham, said he believes there is something more to it.
“The thematic review wasn’t expected,” he said. “They are digging and digging and you can’t help suspect that if they’re digging, they must have found something. I take that third review as a sign that they have found something and are looking for more.”
Mr Leggett said he believes an area of concern will be around keeping client money separate and the structural requirements needed to support asset reconciliation.
Sipp operators fell under the spotlight earlier this year as the regulator highlighted potential concerns around Harlequin property investments, which was later found to have been accepted by many Sipp operators. In addition, the industry is still awaiting final guidance on capital adequacy, which is now due before the end of the year.
In the latest Money Management Sipp survey, several operators highlighted that they felt the regulator is taking steps to better understand how providers work, spanning from large Sipp providers right down to the smaller ones.