FCA losing patience with Sipp operators in Dear CEO letter

Self invested personal pension operators are still failing to manage risks and ensure customers are protected appropriately, despite recent guidance, the Financial Conduct Authority said in a ‘dear CEO’ letter.

In October, the FCA launched a third thematic review of Sipp operators, focusing on the due diligence procedures Sipp operators used to assess non-standard investments, and how well firms were adhering to the relevant prudential rules.

During the review, the FCA found that a “significant number” of Sipp operators were still failing to manage these risks and ensure consumers are protected appropriately, despite its recent guidance.

Article continues after advert

The failings identified put UK consumers’ pension savings at “considerable risk”, particularly from scams and pension fraud.

The regulator said it has already discussed this with the firms concerned, explaining that these failings are “unacceptable and need to be addressed”.

The ‘dear CEO’ letter said: “I am now writing to you, and to the CEOs of all Sipp operators, because our thematic review indicates that these failings continue and are widespread, despite previous communications.

“We are concerned that many firms in this sector continue to demonstrate a lack of engagement with some areas of their regulatory obligations, and hence pose a threat to the quality of outcomes experienced by consumers.

“We have already required several firms to limit their business as part of our thematic review and in some cases have initiated enforcement investigations.”

The letter warned that over the coming months, the regulator will visit more firms and “expect to see significant improvements”.

The regulator said: “We will also build these areas of focus into our regular supervisory work for smaller (C4) Sipp operators, so we have an opportunity to engage with every firm, and we will use this work to review firms’ actions.

“I would encourage you to review the key findings from our thematic review...and ask you to take action to ensure that your business is able to demonstrate an appropriate degree of protection for consumers’ pension savings.

“Where firms fail to meet our expectations and continue to put UK consumer outcomes at risk, we will take further action.”