The FSA has raised concerns that investors are being sold self-invested personal pensions when a personal pension or stakeholder may be equally appropriate and potentially cheaper.
The regulator has carried out a small thematic project to review financial planning advice which has highlighted worries that advisers are recommending Sipps purely on the basis that they offer a wider fund choice and not because they allow self-selection of assets.
The FSA says: “Under these circumstances, a stakeholder or personal pension may equally satisfy a customer’s needs, potentially at a lower cost.”
It stresses that RU64 applies to Sipp advice so advisers must provide evidence that the arrangement is at least as suitable as stakeholder and be able to show that the investor requires the potentially greater investment flexibility of Sipps.
Hargreaves Lansdown head of pension research Tom McPhail says: “We need to move on from this myth that Sipps are necessarily more expensive than other forms of pensions.”