Mattioli Woods is set to partner with a peer-to-peer lender, in the latest example of the alternative lending option being made available within a pensions wrapper.
Speaking to FTAdviser, Mattioli Woods director Murray Smith emphasised that the deal with lender Folk2Folk is in the “early days” of the due diligence phase.
“The idea is that Folk2Folk would refer clients interested in peer-to-peer via their pension and we, as the provider, would carry out the suitability reviews and potentially advise the client on their wider pension and wealth management affairs.
“We have an investors club looking for different investments - property-based lending which is short-term, high returns with a bit of risk - those clients would offer a block deal to peer-to-peer lenders.”
Mr Smith added that Folk2Folk have been struggling to find a Sipp provider to facilitate this, perhaps due to the new capital adequacy rules set to come in next September.
“Sipp providers will consolidate or reduce the flexibility of their proposition or costs will rise,” he added.
Jane Dumeresque, chief executive of Folk2Folk, told FTAdviser that while the capital adequacy requirements may have played a role in refusing business, it is more a fear of the unknown that made providers say no.
From next September, the fixed minimum capital required for Sipp firms will be £20,000, with much higher rates applicable for those that hold ‘non-standard’ assets
The regulator also confirmed this will not apply for those smaller firms - around a fifth of the market has been expected to be lost due to the new rules - who administer less than £200m of pension assets.
Despite these concerns, demand appears to be growing for peer-to-peer loans in pensions, especially since pension freedom legislation came into force which have prompted savers to look at alternative income-generating assets.
In April P2P portal Ratesetter confirmed its launched into the retirement savings market with self-invested pension providers London and Colonial and European Pensions Management, while in February bonds auction platform UK Bond Network launched with Sippclub.
Elsewhere, Mr Smith believes that over the next 12 months consolidation in the Sipp market will happen as providers simply can no longer bury their heads in the sand over capital reserve demands. “Some people think there will be a reprieve, but some business do not have the resources to do it.”
Martin Tilley, head of technical pensions at Dentons, opined that there currently are “several, well capitalised and strong acquisitive firms in the market,” adding that numerous deals have already been done, while those left are less attractive and will struggle to find buyers.
“As we get closer to September 2016 I think you will see some more consolidation in the market, but it might be on buyers rather than sellers terms,” he concluded.
donia.o’loughlin@ft.com
