Sipp providers face FCA scrutiny over disclosure

When asked if providers and advisers across the industry were meeting the regulator’s Sipp disclosure requirements, the head of pensions and investment at LV=, said: “There is still some work to do there.”

He said: “If you look at the Sipp industry, there are a lot of smaller Sipp providers, and some of those guys do not have the resources and capabilities that some of the bigger companies have.

“It has taken them [smaller Sipp providers] a little while longer to get up to speed but they still need to get there.”

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He said the regulator was looking at the Sipp industry generally, with a number of thematic reviews and capital adequacy rules coming in, which could lead to some regulatory action.

Mr Chinn said: “The challenge for the Sipp industry is, moving into regulation, the rules are not rules but principles, and you have to interpret them.

“There will certainly be some questions from the FCA about how some firms have interpreted the rules.

“I think it is important that disclosure is managed correctly so that consumers can have confidence in the industry. We don’t want to see huge fines and ‘Sipps are bad’ headlines plastered all over the press.

“But customers should get a fair deal and be able to compare like with like when looking at different product solutions.”

Adviser view

David Trenner, technical director of Glasgow-based Intelligent Pensions, said there was a strange belief by the regulator that the more paper you give to consumers, the more they will understand.

However he said he had seen worrying examples where providers were getting round the disclosure rules, which he described as “very frightening”.

He added: “We have come across people holding an offshore bond in a Sipp when an onshore bond would have been suitable. With an offshore bond, disclosure goes to the trustee and not the bond holder.”