The Financial Conduct Authority is under growing pressure to re-think plans to link Sipp provider capital requirements to a firm’s assets under administration after a Freedom of Information request revealed “minimal” industry support for the proposal.
The regulator is currently consulting on proposals to change the basis of the capital adequacy calculation from expenditure to assets under administration.
In addition, the regulator wants to raise the minimum amount of capital a Sipp administrator needs to hold from £5,000 to £20,000.
Amps has obtained 55 of the 57 industry responses to the consultation through an FoI request. It says while there was “strong backing” for extra consumer protection, there was “minimal support” for the formula the regulator has proposed.
Amps chairman Andrew Roberts says, as an interim measure, the FCA should raise the minimum capital level to £50,000. He says the regulator should then carry out more detailed analysis of the appropriateness of basing Sipp capital requirements on assets rather than expenditure.
Affluent Financial Planning managing director Carl Melvin says: “It is very dangerous to base capital adequacy rules on expenditure as it encourages firms to cut costs.”