The regulator should consider introducing capital adequacy requirements below the 100 per cent level to avoid inefficiencies in the market, according to Barnett Waddingham.
Andrew Roberts, partner at the self-invested personal pension (Sipp) provider, said holding the total capital adequacy suggested by the regulator’s paper could inhibit business.
“It is not efficient having exactly the right amount of money required to have the amount of money needed to wind down,” he said.
Proposed new capital adequacy rules for Sipp operators were outlined a year ago and have faced criticism over whether they are adequate. Final rules are yet to be published; although originally expected in September, they have since been delayed.
Mr Roberts said that holding precisely the amount of money outlined by the rules would be difficult in practice.
“If that happened, there would be a lot of money not active in the Sipp market,” he said.
The FCA could introduce the requirement at lower than 100 per cent, Mr Roberts suggested, although he said he could not pin down what level would be appropriate.
It should be taken into account, he added, that Sipp operators’ capital is not static as fees are coming in on a regular basis, which could contribute to any wind-down costs if necessary.
