Pensions  

Curtis Banks rules out distressed Sipp purchases

Curtis Banks rules out distressed Sipp purchases

Self-invested personal pension provider Curtis Banks Group has ruled out any purchasing “distressed Sipp books.”

Sipp providers are expected to consolidate as a result of changes to capital adequacy requirements for providers that came in last week, on 1 September.

First announced by then Financial Services Authority in November 2012, Sipp operators have been required to increase the capital they hold in reserve.

The new formula has resulted in a significant increase in capital requirements for Sipp operators whose assets contained the greatest proportions of non-standard assets.

In January this year, the Financial Conduct Authority revealed it is ready to wind up self-invested personal pension providers who fail to meet capital requirement expectations.

Since then the Sipp market has seen a flurry of M&A activity.

Curtis Banks has dominated M&A activity this year.

In July this year, acquired the self-invested personal pension plan business of European Pensions Management from its special administrators, for an undisclosed sum.

At that time, EPM administered about 5,000 Sipps, with assets under administration of roughly £630m.

That purchase came hot on the heels of Curtis Banks completing the acquisition of Suffolk Life from Legal & General.

At that time, Curtis Banks and Suffolk Life Group administered about 68,000 pension schemes with assets under administration of about £18bn.

Curtis Banks published results this morning that revealed the number of self-invested personal pensions administered doubled in number year-on-year.

The unaudited six month period ended 30 June 2016 saw 67,161 Sipps administered, compared with 26,755 at the 30 June 2015.

But speaking to FTAdviser, when asked was Curtis Banks of the hunt for more Sipp books to buy, Gregory Kingston, head of communications at Suffolk Life, told FTAdviser: “The group is only interested in taking books of quality, not distressed books.”

He explained he did not believe any other business on the market had the “proven ability” to conduct an acquisition quite like Curtis Banks could at the moment.

Additionally, Mr Kingston noted a number of life insurers are currently trying to ditch their books of Sipp business.

Stuart Read, director at Kingsbridge-based Sabre Financial, said: “I can fully understand why they’d only want to buy the book of a non-distressed Sipp provider.

“That is reassuring for IFAs to know that they are not just buying anything and that they are concerned about quality.

“My concern is that providers get too big and lose service standards. If they were to buy distressed books it is up to them but it is fraught with problems.”

ruth.gillbe@ft.com