FSA plans could push 50% of Sipp administrators out of business


Onerous FSA proposals which could force Sipp providers to produce specific key features illustrations for certain investment products would force 50 per cent of pensions administrators out of business, Standard Life says.

A consultation released yesterday proposes revising rules so illustrations and projections are required for all investments held within a personal pension scheme other than commercial property, commodity investments, ‘synthetic’ ETFs and shares.

Standard Life head of pensions policy John Lawson (pictured) says providers who use generic illustrations would have to produce “tens of thousands” of individual projections for clients if the proposals are pushed through.

He says: “This has come out of left field. Given that there are thousands, if not tens of thousands, of funds in the market, the difficulty will be projecting for any one given fund. The cost of it is enormous, I think this could put 50 per cent of Sipp administrators out of business.

“We’re talking about costs in the millions of pounds to build a system which can do this, and doing it on an individual basis might be £100 a quote. Anybody that’s a Sipp administrator whose not an insurer will be thinking ‘this is going to be horrendous’.”

A J Bell marketing director Billy Mackay says: “If you look across the market, providers who historically haven’t provided that information are going to have to invest time, effort and money in building it. There’s no doubt it will stretch the resources of some firms.”

Hargreaves Lansdown head of pensions research Tom McPhail says the Sipp provider will seek greater clarity from the FSA on the intentions of the proposals.

He says: “The FSA are putting up some interesting ideas, but I’m not clear whether we’ll end up with generic illustrations or customer specific, and the extent to which we would need to quiz the customer about their investment intentions ahead of the final purchase. They also seem to be suggesting these could be optional, so we’ve just got to see where we get to in the discussions.”