“We would expect them to use their expertise and knowledge of the client to determine whether the investment is suitable for a particular client, taking into account the risk and potential return of the investment.”
Commercial property
Alongside the regulator’s capital adequacy requirement ruling, it also announced it would be adding UK commercial property to the standard asset list. The regulator said bank account deposits, physical gold bullion, National Savings & Investment products, units in regulated collective investment schemes and UK commercial property have all been added to the standard assets list.
The shift represents a major change since its last statement in May this year that claimed it would be keeping the asset as non-standard. In response, the FCA said, “Our experience of Sipp operators that have exited the Sipp market has shown that, where non-standard asset types are held within schemes, the costs involved in transferring these schemes to another provider can be significantly higher than for schemes containing only standard asset types. We did not receive feedback that persuaded us otherwise.”
The announcement was met with praise from many providers. Table A, available online at ftadviser.com/mm, details the charges and types of property a Sipp can hold – this ranges from hotel rooms to overseas property to land.
Andy Leggett, head of business development of Sipps at Barnett Waddingham, says, “The regulator has quite rightly come round to the view that commercial property is usually a standard asset within Sipps. It is generally a fairly conservative, income-producing, real asset and one that has been a major contributor to the growth of Sipps for their 25 years of existence.”
Mr Leggett adds that, in general, the more commercial property a Sipp operator has within its book, the more attractive it will be to acquirers. He points towards the firm’s acquisition of Harsant as an example, which will see the firm add more than 400 Sipp clients to its existing business. Furthermore, the group has also acquired Chase de Vere’s Sipp and Ssas book for an undisclosed figure, in a deal which will see the firm add 250 Sipp and 275 Ssas clients.
But not all providers have met the decision with open arms. Suffolk Life has been vocal on its view that UK commercial property should be classed as a non-standard asset. Greg Kingston, head of marketing and proposition at the firm, says, “As PS14/12 is written, until the industry can provide demonstrable evidence that property can be transferred within 30 days in the event of an operator winding down it is difficult to see how it can be classed otherwise.
