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FCA Sipp cap ad reforms to cost industry £18m

Sipp operators will be forced to hold an extra £18m in reserve capital under proposals outlined by the FCA today.

The regulator’s capital adequacy proposals, published this morning, are significantly watered down compared to those put forward in the original 2012 consultation.

The formula used to calculate firms’ capital requirements has been amended to reduce the burden on small Sipp providers, while UK commercial property has been added to a list of standard assets and so will not be subject to a capital surcharge.

Sipp operators have been given until September 2016 to comply with the revised requirements.

The FCA estimates the proposals will result in total increase in cap ad across the industry of around £18m. The regulator says if this is passed on in full to clients through higher fees, the average customer will experience a rise in costs of approximately 0.005 per cent.

The original consultation suggested the reforms could cost the industry £54m.

Liberty Sipp managing director John Fox says: “The last-minute watering down of the requirements will allow many of the industry’s smaller players to breathe a sigh of relief. 

“Not only will the capital adequacy burden on them be less than the eye-watering levels predicted, but firms will have substantially longer to get their balance sheets into shape.”


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