The FSA says Sipp operators risk causing “significant consumer detriment” through a “failure to adequately control their business”.
The regulator has today published the results of a thematic review into the Sipp market.
As a result of the review’s findings, the FSA will launch a programme of work designed to strengthen capital requirements, disclosure and inflation-adjusted projections for Sipps.
It says: “Poor firm compliance with regulatory requirements, particularly in the area of risk planning and mitigation, has significantly increased the risk posed by Sipp operators.
“In addition to generally poor systems and controls, the majority of Sipp operators we visited were unable to articulate the application of Client Money & Assets rules to their business structure.
“We also found inadequate controls over the investments held within some Sipps.
“Together these findings make it clear that Sipp operators have the potential to lead to significant consumer detriment through a failure to adequately control their business.”