SIPP users may justifiably have been confused by the range of potentially contradictory provider comments shared in the press on these, particularly capital adequacy.
We all want a competitive and vibrant SIPP market but there must be an appreciation that advisers and clients want an operator that has a long-term future and commitment to the market. It is therefore in all parties’ interests to have a sensibly regulated and adequately capitalised SIPP industry.
The FCA’s consultations indicate that it is looking for a substantial increase in the capital held. When we are eventually provided with the rules, I hope we do not see long-term players forced out of the market by overly aggressive measures or insufficient time for operators to make their financial structure fit for purpose.
Balancing sensible regulation and adequate capitalisation is the key point. A wide range of different SIPP propositions and fee structures will benefit all. But advisers and their clients need confidence in the long-term future of their chosen SIPP operator.
Turning to fears, I would have to say that I am not typically the type of individual that is driven by fear. If forced to comment, we must be mindful that the SIPP market has been facing its third FCA thematic review in as many years. The outcome of this will be more change. The industry is not afraid of change, in fact there are areas where calls for change have fallen on deaf ears. Our own lobbying activity involves a call for change in seven areas. One that involves SIPPs and that we have been pushing for some time, is the re-introduction of a permitted investment list.
The harsh reality is that, before A-Day when there was a SIPP permitted investment list, it was rare to hear about SIPP investments failing. Since A-Day, we have seen a steady stream of failed investments that were purchased via SIPPs, a number of which would not have been permitted under the previous rules. Any change that helps address the number of failing SIPP investments and provides investors with greater protection must be good but I fear this will remain a hope.
I was watching a film with my son last week when I heard the quote “Hope. It is the only thing stronger than fear.” Let’s hope so.
Billy Mackay
Marketing Director
AJ Bell