Friends Life has come under fire after the insurer hiked Sipp fees 21 per cent for 2,000 policyholders in response to rising regulatory costs.
The provider is contacting Sipp clients six weeks before their anniversary date – when the increase comes into effect – to warn them about the fee rise.
A Friends Life spokeswoman says the decision comes in response to tougher Client Money and Asset Return regulations introduced by the regulator in 2011.
She says: “We are increasing the policy fee of some Sipp products to cover the additional costs incurred as a result of Client Money and Asset Return regulation. This increase follows a number of years where no fee increases have been required.”
She says the regulations have meant additional responsibilities and reporting activity for the banking, assets and compliance teams, plus the cost of external client assets sourcebook audits.
She adds: “We have managed to absorb the additional costs since 2011, but it is now necessary to increase the charges on the policies to cover them.”
First Financial IFA principal Graham Franklin says: “I have three clients with commercial property in a Friends Life Sipp and it is not possible to complete a transfer in six weeks.
“The Sipp fees are paid in advance, so as things stand my clients will have to pay 10 months of fees to Friends Life even though they will no longer be the administrator.
“That is not fair and it smacks of a provider wanting to get out of the Sipp market.”
More to Sipps principal John Moret says: “A 21 per cent increase in fees will make Friends Life extremely uncompetitive and sends a signal that they no longer want to play in the Sipp market.
“I expect we will see more of this sort of activity from firms who do not see Sipps as a core part of their business.”