The Financial Conduct Authority (FCA) plans to review advice on non-standard assets in the next year, its director of life insurance and financial advice has said.
Deborah Jones, told the Work and Pensions select committee today (February 6) about the watchdog’s plans in the self-invested personal pension (Sipp) market.
She said: "We remain of the view that there is a place in the market for a wide range of investments, and it is very important that non-standard investments are sold only to those consumers to whom they are suitable.
"Looking at the high risk investments to revisit whether advisers are taking an appropriate approach is a piece of work we have planned for next year."
Andrew Bailey (pictured), the FCA’s chief executive, was also at the hearing.
He was questioned about the impact of a letter sent to Sipp providers in October, which urged them to inform the regulator if they are affected by the Berkeley Burke judicial review.
The High Court had found Sipp providers had a duty to check non-standard underlying investments before taking on a client wishing to invest in the assets.
But Mr Bailey said the jury was still out.
He stated: "The message clearly got home, because we got some clear responses, but the jury is out in terms of the practice of it."
Ms Jones added: "We followed up with phone calls to all the relevant firms and some site visits in the appropriate cases, and there is ongoing activity with the firms where we aren’t completely satisfied at the moment that they’re in the right space."
Questioned by the MPs about the regulator’s supervision work of the Sipp sector, Mr Bailey said the market had grown quite rapidly in the last years.
He said: "It has evolved in two parts, one is what you could call the high net worth sector, and the other is much different, with people using it for much smaller savings and relying on it much more as a source of income.
"We had to catch up with that evolution, it has caused practices to happen that had detriment. We had to clamp down very hard on the practice of putting unacceptably risky assets into Sipps."
maria.espadinha@ft.com
