Denton’s Mr Tilley says the regulator appears to be taking a real interest in how Sipp operators work on a day-to-day basis, particularly on the processes for accepting certain assets. “It wouldn’t surprise me if future FCA reviews focus on that,” he says.
James Hay’s Mr Conway says the regulator is taking a much closer look than previously. “They are keen to probe you on an individual basis,” he says. “It is challenging but constructive.”
The differences between large and small companies really become apparent at this stage, he says. Understanding the technical details of how processes work is very important for the regulator – there is no point in it coming out with a set of rules if the industry turns around and says it cannot implement them, or cannot do so within the specified timescale.
Where now?
For Sipp providers, the waiting game continues. Uncertainty prevails: will the FCA stick to its predecessor’s original plan? Will it come up with a new formula? Will it scrutinise the industry even further once it has made its final plans?
Advisers must continue placing business in the meantime. That means a heightened level of due diligence, ensuring a full understanding of how the Sipp provider operates and knowing what to do if the provider were to cease to exist. No adviser wants to be in such a situation, but being prepared makes it easier to deal with.
And it once again highlights the need to be absolutely sure of what clients are investing in. Some schemes might seem perfectly reasonable until they go under, but it is worth being doubly careful. Sipp operators will be, too – if four providers out of five won’t touch something, there is probably a reason for it.
