Private bank Cater Allen will cease to be a Sipp provider rather than apply to be reg-ulated under the FSA regime and Bank of Scotland is believed to be adopting a similar stance.
Banks act as nominees or guarantors for Sipp offerings, picking up the tab if the firm providing the Sipp cannot meet its liabilities.
Cater Allen Pensions currently acts as a Sipp provider, providing regulatory backing for firms which offer Sipps. It says it has decided not to apply to remain a Sipp provider or establisher when regulation comes into force next April as it believes firms will be better off directly authorised. It plans to focus fully on providing banking services for Sipp providers.
Bank of Scotland is also understood to be adopting a similar stance although BOS Investment Services says it will continue to provide a Sipp through James Hay.
Alliance Trust head of business Ian Dawson says: “This could be a problem for sma-ller companies and banks that remain in the market may be particularly reluctant to back smaller Sipp offerings which they may see as more risky.
“It will be an administrative nightmare to move all bank accounts to someone else and smaller providers may struggle with this.”
Pal Partners business dev-elopment director Richard Mattison says: “This could contribute to consolidation in the market.”
A Cater Allen spokesman says: “We have informed all affected parties of our decision and we are now working closely with all of them to ensure a smooth transition.”