Self-invested personal pension (Sipp) specialist Dentons is “actively looking” to acquire other Sipp providers, and is currently in talks with a number of businesses, Financial Adviser can reveal.
Technical services director Martin Tilley said a couple of these businesses were looking to offload their book of Sipps because increasing regulation was making the sector too expensive.
Increased capital adequacy requirements for Sipps, due to come into force in September, were accelerating the decision of some firms to exit the market, he said.
“We are in discussions with a number of Sipp and small self-administered scheme (Ssas) books,” he told Financial Adviser. “Some are not very far progressed, some are a bit further. But we are actively pursuing acquisitions within the market place.”
Non-disclosure agreements prevented him from naming the firms, but two of them are diversified businesses with an ancillary Sipp operation. He said capital adequacy was “probably a contributing factor” in these firms’ decisions to sell.
“If the Sipp business is not core to their business, but it’s requiring them to put aside certain levels of capital which they would be better able to invest elsewhere in the business, then there are sound business reasons for selling up,” he said.
Dentons has calculated it will have to put aside £2.2m under the new capital adequacy regime – enough to cover business expenses for a year, in the event of an organised wind-up.
Mr Tilley said this will not push fees up, which currently stand at £350 to set up a Sipp, and an ongoing annual fee of £545 plus VAT.
Adviser view
Floyd Fombo, an adviser with Rathmore Financial, said the movement towards consolidation in the Sipp industry was a double-edged sword.
“It could stifle competition within the space, but it could also enhance administration by centralising it and making it much more efficient,” he said.
Mr Fombo added that he did not expect the capital adequacy requirements to have a major effect on his Sipp-invested clients.
