This year’s survey features responses from 52 providers, in line with the number of respondents seen in recent editions of our biannual report, and all figures are to 31 December 2016 unless stated. The likes of Carey Pensions and Pilling return to the survey this time around, but others, such as Wensley Mackay, failed to respond. Yorsipp, meanwhile, has stuck to its policy of absenting itself.
As ever, Money Management hopes that providers will continue to participate over the course of our future editions.
Adequate?
Table 1 focuses on Sipp operators’ capital adequacy requirements – the cause of much debate in the industry over recent years. Our last survey, figures for which were up-to-date as of 1 August 2016, found many providers decline to state whether or not they met regulatory requirements.
The rules subsequently came into force on 1 September, and there has been an increase in the number of firms disclosing figures. But there remains a number of notable holdouts, including The Lifetime Sipp, Sippchoice and Taylor Patterson.
It should be noted that the table has been altered in this edition, removing those who are not subject to the specific Sipp operator capital adequacy rules, such as insurers.
For those that are still included, we have asked for more details of how they meet these requirements. Each provider was asked to break down their holdings into Tier 1 capital (cash and reserves) and Tier 2/3 capital (debt, preference shares and other forms of funding). While there is nothing intrinsically inferior about Tier 2 capital, its use may indicate that a company has borrowed money to conform with the rules.
The table indicates that the vast majority of providers rely solely on their own balance sheets, but advisers should not shy away from asking questions about providers’ financial stability if they have any concerns.
The new requirements’ repercussions filter out through many of the other findings in our survey. The rules place a greater capital burden on those holding non-standard assets, but the table shows there has been no wholesale change to practices since 1 September. Some providers no longer permit non-standard assets of any kind.
