PensionsFeb 18 2015

Suffolk Life updates ‘non-standard’ in annual statement

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Suffolk Life updates ‘non-standard’ in annual statement

Suffolk Life has updated its annual statement sent to clients to include whether assets are standard or non-standard so that clients are aware of what is deemed to be higher risk.

From the beginning of March, the annual statement produced by Suffolk Life will, in addition to already listing all reconciled assets within the Sipp, also show whether each investment is a standard or non-standard investment.

Standard assets include cash, old bullion, National Savings and Investment products, bank account deposits, units in regulated collective investment schemes and surprisingly UK commercial property. Non-standard assets include overseas property and private equity - essentially anything which would take more than 30 days for a provider to transfer if the firm is wound up.

Suffolk Life said its changes take into account upcoming regulatory changes, providing advisers and their clients with transparency over assets held.

This is in response to the Financial Conduct Authority’s damning third Sipp thematic review. Published alongside this was a ‘Dear CEO’ letter which warned that Sipp operators are still failing to manage risks and ensure customers are protected appropriately, despite recent guidance.

Greg Kingston, head of marketing and proposition at the firm, noted that a recent survey it conducted found that more than 70 per cent of financial advisers considered awareness of the differences between standard and non-standard investments to be important for both them, their clients and Sipp operators.

Mr Kingston said this validated the view that this is not just an internal industry matter related to capital adequacy.

“We already actively record and track transactions and values of investments even when they’re held with a third party, and this additional level of information will provide significant benefit to investors, setting a new standard in the Sipp market.”

The FCA provided further clarity on the difference between standard and non-standard assets last August, stating that non-standard investments are typically higher risk or speculative propositions, and the entire amount invested is at risk.

“These investments tend to be illiquid and difficult to value, and there may be little or no recourse to the Fos and FSCS, for example if the arrangement is mismanaged... some may be outright scams,” it read.

“Most non-standard investments, such as Ucis, unlisted shares and speculative overseas property schemes, are unlikely to be suitable for those retail investors of ordinary sophistication and means who make up the vast majority of the retail market in the UK.

“However, more sophisticated investors may consider them to be appropriate investment opportunities.”

In August last year, the FCA published its long-awaited new rules on the capital Sipp firms will have to hold in reserve. The FCA confirmed that the fixed minimum capital required is to be £20,000, as first proposed, however firms who administer less than £200m of pension assets are excluded from the rules.

The new rules will come into force on 1 September 2016.

peter.walker@ft.com

Additional reporting by Donia O’Loughlin