PensionsAug 17 2017

Liberty Sipp rejects trio of rivals' acquisition offers

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Liberty Sipp rejects trio of rivals' acquisition offers
ByMaria Espadinha

Liberty Sipp has rejected three acquisition proposals from rivals, its managing director has told FTAdviser.

John Fox declined to reveal the name of these companies, which he said were "struggling with legacy issues and cannot adapt to the market".

Liberty Sipp opted to continue to be an independent provider so it could maintain its costumer-based approach, he said.

The company, which was able to reverse two years of losses in 2016, has been through a restructuring period when it invested in technology and people allowing it to handle a greater number of clients.

The company, which celebrates its 10th anniversary this year, made a pre-tax profit of £420,000 in the year to April.

“The Sipp market has been transformed in recent years, and we have adapted with it,” Mr Fox said.

“We are now at a stage where they [rival providers] were 10 years’ ago, but they did not change,” he added.

Another reason for the acquisition proposals Liberty Sipp received is the consolidation taking place in the Sipp market due to the new capital adequacy rules, which came into effect in September 2016.

Sipp providers had to change their propositions, restrict their range and hike fees as a result of these regulatory changes.

According to the Financial Conduct Authority's product sales data report, the number of Sipp providers in the market dropped 25 per cent in June 2016, when compared to the previous year.

Mr Fox said: “I think that in a few years we will be the only independent provider [in the market]."

Kusal Ariyawansa, a chartered financial planner for Appleton Gerrard Private Wealth Management, said Liberty rejected acquisition proposals “in fear of charge rises and lower service levels".

Mr Ariyawansa said consolidation is good “if smaller providers can integrate efficiently with the more established, provided its original offering is bettered, or not worsened".

He said: “Sipps are becoming more mainstream and I'd prefer to see the complex features being handled by a few established providers.”

Liberty Sipp offers only one product, the Liberty Option Sipp. Introduced in 2013, it charges no set-up fee and an annual management fee of £175 plus VAT.

The company currently administers £1.8bn in client assets and works with 600 financial adviser firms across the UK.

Earlier this week Liberty Sipp appointed Julie Dean as finance and operations director. She was previously chief finance officer at investment manager Frenkel Topping.