FSA investigates small Sipp firms over Ucis risks
The FSA is visiting a number of small Sipp firms to investigate the risks posed by unregulated collective investment schemes.
Over 2008 and 2009, the regulator undertook a thematic review of around 70 small Sipp providers to identify if they were meeting its regulatory requirements. Earlier this year, the FSA asked small Sipp providers to complete a questionnaire about their legal structures and capital adequacy provisions.
An FSA spokesman says the regulator’s latest investigation follows on from this work.
He says: “Following thematic work undertaken in 2008 and published in 2009, we have continued to engage with Sipp firms to help us learn how the market has changed over the last few years. The upcoming firm visits, like the questionnaire we sent out earlier this year, are part of our ongoing supervisory work in the Sipp market.”
AJ Bell marketing director Bill Mackay says visits are part of the normal process of regulating small firms which have less regular contact with the FSA than relationship-managed firms.
He says: “Sipps can use a range of investments with a range of risk but we looked and certainly have not seen anything inherent in using Ucis that poses problems as long as advisers and investors understand the risk involved.”
Suffolk Life head of marketing Greg Kingston says: “We have seen an increase in demand from advisers for the use of Ucis in our schemes but some are not liquid enough. It may be the regulator wants to see if that is a factor that could cause problems.”
AJ Bell and Suffolk Life are not part of the FSA’s investigation.