Rule shake-up to cost 10 times FSA estimate
The FSA’s proposed changes to disclosure rules for pensions and adviser-charging will cost the industry £200m rather than the £20m estimated by the regulator, according to Finance & Technology Research Centre director Ian McKenna.
McKenna says the FSA’s estimate demonstrates a “woeful lack of understanding” of the costs of system implementation.
Earlier this month, a consultation from the regulator proposed changes to product disclosure arising from RDR adviser and consultancy charging and new Sipp disclosure rules.
McKenna says introducing systems for the reforms would cost the industry £200m. He says: “The FSA has either not done its homework properly or it has missed a zero off the end of the numbers. The amount of work needed to change systems is significant, especially the requirement to show the impact of adviser charges on the reduction in yield.
“The £20m figure suggests a woeful lack of understanding of the cost of system implementation and changes. This is going to make it very, very difficult for a lot of small Sipp providers.”
Standard Life head of pensions policy John Lawson said earlier this month the proposals, if implemented, would put half of Sipp administrators out of business. He said: “We are talking about costs in the millions of pounds to build a system which can do this. Any Sipp administrator that is not an insurer will be thinking this is going to be horrendous.”
An FSA spokesman says: “As with any consultation, the FSA is inviting individuals and firms to contact us and give us their feedback.”