The number of respondents on this occasion has been positive – with a total of 47 providers surveyed – slightly lower than numbers seen in recent editions. This time around, some firms have grouped together their individual products – for example Talbot and Muir, which has grouped its three Sipps into one for simplicity. All of the figures have been recorded up to 31 July, with the exception of Old Mutual’s business volumes that have been taken as at 30 June.
Adequate concerns
For providers, it is not mis-selling, but capital adequacy requirements that has proven the greatest issue of recent times. The requirements caused something of a stir upon implementation on 1 September 2016. Our April survey provided the first opportunity to see if firms were satisfying the demands of the new regulatory regime.
Concerns about some firms’ ability to not only meet the requirements, but also continue to grow, were such that a number of experts and commentators believed further consolidation would be imminent. So far, in the aftermath of Embark Group’s deal for Rowanmoor last July, acquisition activity has actually died down rather than increasing.
Many have continued to grapple with their capital positions long after the September deadline. Earlier this year, the FCA acknowledged three providers were still falling short of its requirements, although the regulator has recently confirmed that, as of the middle of September, this had reduced to one firm.
Martin Tilley, director of technical services at Dentons, is not alone in predicting that although consolidation in the industry has slowed, it will restart in the near future. Mr Tilley also explains that the new CP14/12 requirement has already forced a number of firms to take drastic, corrective action.
He said: “For some providers, the need to gear up and invest in the resources to meet the new requirements was simply too great. Some exited the market by sale, others amended their propositions, so as to reduce or cease their acceptance of certain categories of business. Some did this voluntarily, while others apparently agreed to do so, with the suggestion of the regulator.”
Furthermore, other commentators feel the capital adequacy requirements remain the greatest industry concern.
“They have been detrimental to the Sipp market. It has resulted in substantial consolidation of Sipp providers and severely restricted the investment choice available to Sipp members,” says Guy Young, director at Nigel Sloam.
Despite Mr Young’s concerns, Table 1 shows that all those that have disclosed figures are at or above the 100 per cent threshold, and the majority are able to provide this from Tier 1 capital (cash or reserves).
