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Big Sipp firms wary of taking over small operators

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Helen Pow

Big Sipp providers could be reluctant to buy smaller firms that offer a wide range of investments.

The FSA’s recent investigation into smaller Sipp providers has prompted industry experts, including Suffolk Life marketing director John Moret, to predict a flurry of consolidation in the sector.

The report found that many small players are failing to meet their regulatory obligations, particularly on treating customers fairly.

But AJ Bell marketing director Billy Mackay says consolidation will not be straightforward as bigger players will be wary of the small operators’ practices.

Mackay says: “When looking at consolidation, you can be sure the bigger players would be keen to look at the nature of the assets held. In particular, most will be keen to avoid any assets that are or could be considered taxable property.

“The primary purpose of the taxable property legislation is to discourage investment by registered pension schemes into residential property, works of art, racehorses, vintage cars, fine wine and the like. The tax consequences simply cannot be ignored.”

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