Increasing concerns about Sipp provider capital adequacy

Increasing concerns about Sipp provider capital adequacy

More than half of advisers are “concerned” about the looming capital adequacy standards that will be imposed upon self-invested personal pension providers in September, research by Qrops and Sipp provider Momentum Pensions has found.

More than 100 advisers were asked whether they agreed with the statement, “I’m concerned about Sipp provider capital adequacy rules being introduced in September 2016”.

Fifty-six per cent said they did have concerns about the rules.

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The number of “concerned” advisers was up from the January figure, when 45 per cent expressed concern about the new standards.

The advisers did not specify what exactly they were concerned about, but in a statement accompanying the results, Momentum’s director and head of sales for UK and Europe Paul Forman interpreted their concerns as a fear the standards would not be met.

“As September’s capital adequacy deadline draws ever closer, our research indicates a steady increase in the level of unease amongst advisers when it comes to their Sipp providers’ abilities to meet the requirements,” Mr Forman said.

“A 9 per cent increase is worrying – if anything, we should be seeing advisers’ fears ebbing away because Sipp providers should be communicating their position to advisers, leaving no room for doubts or concerns.”

The research also found that 74 per cent of respondents had seen advisers charged fees by their Sipp providers that they were not expecting, while 74 per cent said they found it difficult to compare the charging structures of different Sipp providers.

Darren Cooke, a chartered financial planner with Red Circle Financial Planning, agreed with the majority of advisers that some providers would struggle to meet the standards.

He said: “It will weed out some of the wheat from the chaff, which in some ways is no bad thing.

“If you can’t meet those capital adequacy rules as it stands, then maybe you shouldn’t be in business.”

However, he said he wasn’t concerned for his own clients, because he only uses the major providers, all of which he believed were well-capitalised.