The FSA has proposed a number of changes to the disclosure rules as they apply to personal pensions, including SIPPs. On Key Feature Illustrations, they are proposing that all personal pension disclosure documents should include projections, effect of charges and reduction in yield information, no matter what investments or assets are held.
The paper also proposes that firms disclose details of bank account interest or investment commissions that they retain. Any interest retained and commissions received by the firm are to be disclosed alongside information about fees, costs, charges payable and bank interest rates receivable by the client.
Billy Mackay, Marketing Director of A J Bell says, “On Key Feature Illustrations the aim is to improve comparability. The paper starts with the assumption that many personal pensions branded as SIPPs are not really any different to many of the other personal pensions available, such as insured plans. Any aspiration for a one size fits all solution introduces practical challenges that will bamboozle advisers and investors. Requiring illustrations where you are shoe-horning all asset types into the same process will complicate the assumptions needed to produce meaningful illustrations. This will significantly reduce the chances of achieving any sort of comparability.”
Andy Bell, CEO of A J Bell continued, “The proposals on bank account interest and commissions can only work for the benefit of consumers if the rules are applied consistently across all longer term savings products and all types of providers and include areas such as ISAs, General Investment Accounts, investment bonds and discretionary fund management services. Adopting a piecemeal approach raises the risk of a raft of unintended consequences.”
Bell concluded, “The rules must also cover situations where the SIPP operator is either owned by a bank or has its own banking licence. This raises the question of whether the FSA will go to the lengths of making banks disclose how much they earn on their cash deposits.”