A senior member of the FCA has told MPs it will review non-standard assets next year.
FCA director of life insurance and financial advice Deborah Jones was part of a panel giving evidence to the work and pensions select committee.
Currently the committee is looking into the issue of contingent fees and charging for pension transfer advice where the level of charges paid to advisers is dependent on the recomendation given.
Jones was asked about the progress of the FCA’s supervisory work on Sipps.
On the same day as this letter was sent the High Court published a landmark ruling where Berkeley Burke lost its case against the Financial Ombudsman Service which it is currently appealing.
Money Marketing reported about the data request that followed the watchdog’s Dear CEO letter that asked Sipp providers to give information about their business activity.
When asked about the work Jones said: “We wrote the [Dear CEO] letter and followed up with phone calls to all the relevant firms and some site visits in appropriate cases. There is ongoing activity with the firms where we are not satisfied they are in the right space to ensure they are in a better financial state to protect consumers in the event claims need to be made.
“I would also flag in cases where an adviser has suggested a client put money with the Sipp operator there are potentially two parties at fault and we would have to look at that in the round. This is one of the angles we are aware of.
“Looking at high risk investments and if advisers are taking an appropriate approach is a piece of work we have got planned for next year.”
FCA chief executive Andrew Bailey (pictured) was also asked about the answers the FCA has received about the ability of Sipp providers to pay out compensation for any potential claims.
He said: “In all honesty the jury is out in the sense the message clearly got home because we got some very clear responses but the jury is out in terms of the practice of [Sipp providers].
“The Sipp industry has evolved in the last six, seven to eight years with one part being for high net worth individuals and the other for people with much less income who are solely relying on the Sipp.
“I think we [the FCA] have had to catch up with that evolution because it has caused practices to happen which have been of definite detriment to people. We have had to clamp down very hard on the practice of putting risky investments into Sipps.”
The watchdog also said it has 10 dedicated staff working on pension scams but this might increase in the future if appropriate.
The regulator also said it is investing in technology to improve data collection so respond more nimbly to problems.
FCA executive director of strategy and competition Chris Woolard said: “Regarding investment in technology, the first pilot of this data collection is for Sipp operators that might be doing bad things in this space and the second area is around phoenixing where advisers go bust, resurface and how we trace them through a complex web of companies.”