The chief executive of Suffolk Life said 2016 was another year of change for pensions but added there may be indications that a period of stability is beginning.
Will Self said the "murkier" side of the Sipps market was all too evident in 2016.
"At the beginning of December the FSCS half year update revealed another sharp increase in claims related to ‘risky assets’ invested in Sipps.
"It highlighted claims for investments into Caribbean holiday resorts, storage pods and Asian oil plantations as contributing to a bill of £143m. An interim levy in 2017 now seems inevitable."
He noted that just four adviser firms were responsible for 73 per cent of these claims, with the remaining claims coming from a further 167.
"This is a significant concentration, and there is likely to be a similar concentration of Sipp providers who allowed and facilitated these investments. Little wonder then that the Sipp industry continues to receive the regulatory scrutiny that it does.
"Continued consolidation will expose the poorer Sipp operators over time. The better Sipp providers are already emerging stronger and better placed to meet the needs of advisers and their clients. A period of stability in pension legislation will allow them to accelerate their improvements."
Mr Self said the new chancellor of the Exchequer was able to continue expansive pension change in 2016, but had chosen a different direction.
He said the scrapping of plans for a secondary annuity market in October were the first sign that policy was changing.
"At the Autumn Statement where, faced with growing fiscal pressures and a huge temptation to reform pension tax relief to address those pressures, the chancellor restricted his pension tinkering to an adjustment of the money purchase annual allowance.
"The money purchase annual allowance was reduced from £10,000 to £4,000 – a questionable decision but nevertheless one that will have only the significance of a rounding error on the cost of pension tax relief to the exchequer."
Mr Self noted the legacy of former chancellor George Osborne continued to deliver significant change to pensions last year.
"The lifetime allowance reduced once again, to £1m, triggering another complex round of pension protection. And the annual allowance has also seen change, with the horribly complex tapered annual allowance introduced for savers with ‘adjusted income’, or those with earnings in excess of £150,000."
He added the various changes, and those from previous years, have heaped pressure on the pension industry, advisers and savers.
Mr Self said a period of stability is required to restore confidence in savers and to allow providers to deliver meaningful change to improve customer experience and outcomes.
He said: "The Sipp market has also experienced a good deal of change. The sale of our business, Suffolk Life, to Curtis Banks created the UK’s largest independent provider of bespoke Sipps, and there’s been consolidation elsewhere too.
"This is likely to continue in 2017 as regulation and the cost of the new capital regime continue to bite on smaller Sipp providers in particular."
ruth.gillbe@ft.com
