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FCA bows to provider pressure on Sipp cap ad rules

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The FCA has set out proposals to ease the burden on Sipp providers ahead of the introduction of new capital adequacy requirements in 2016.

In its quarterly consultation, published last week, the regulator says firms will still have to calculate assets under administration quarterly but can use valuations up to a year old.

It says: “For some firms, obtaining accurate quarterly valuations of the AUA in a timely manner can be difficult, largely due to systems and reliance on third parties.

“Therefore, we propose that firms can rely on the valuations provided to members for the purpose of the calculation in these rules.”

Firms will also be given six months to boost capital if AUA increases.

There has been confusion over whether commercial property should be treated as a standard or non-standard asset.

The regulator says the “key consideration” is whether the asset is “capable” of being realised within 30 days.

It says: “For a UK commercial property, the asset should be considered to have been realised at the point that the land registry is formally notified.

“In addition to this, we clarify that responsibilities and expectations around valuations and due diligence is in line with previous FCA guidance.”

AJ Bell technical resources manager Gareth James says: “They are emphasising ‘capable’. It might be unlikely to be realised in that timeframe but if it’s capable of being done we can treat it as standard.

“I’m sure there are still going to be questioned asked by some providers, but it should make life simpler.”

The definition of shares has also been broadened, which James says is “helpful” as the new definition is closer to what Sipp providers typically used.

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  1. Jeff Steedman 8th June 2015 at 9:25 am

    Some common sense regarding valuations of assets held by SIPPs from the FCA – at last. However, I think that those SIPP providers holding “hotel rooms” and other overseas property assets will still have to hold more capital for these assets classes as the statement clearly states “UK commercial property”. This does make sense though. I also assume “UK commercial property” will include land assets including Agricultural land and brown field sites?

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