View more on these topics

FSA widens its Omo probe to cover Sipps

The FSA has extended its review of the open market option from personal and stakeholder pensions to Sipps.

In a letter seen by Money Marketing, the regulator has asked bigger firms to submit copies of the wake-up pack they provide customers four months beforetheir retirement date as well as the reminder pack issued six weeks before retirement.

The FSA has asked to see copies of internal documents that show firms’ processes and corresponding service levels at each stage of an Omo transfer to uncover delays. It also wants details of service levels and monitoring controls employed by third parties.

The document states: “Last year the FSA conducted a thematic review of the open market option for maturing personal and stakeholder pensions. In light of that review, we are undertaking an information-gathering exercise in relation to firms’ practices in advising their Sipp clients and the effectiveness of Omo information given to pension customers approaching retirement age.”

The FSA has also requested examples of Omo literature from smaller firms, as part of its thematic review into small Sipp providers, which was revealed by Money Marketing last week.

Last summer, the regulator found four in 10 insurance companies were failing to adequately flag up the Omo to clients. It claimed that many providers’ wake-up packs were unclear or misleading.

An FSA spokesman says: “We are taking a sample of larger Sipp providers’ literature to make sure it meets our requirements on the Omo. We aim to report back to the firms and the industry by the third quarter.”

In 2008, the proportion of people using the Omo fell to 37 per cent from 39 per cent in 2007, according to the Asso- ciation of British Insurers.

The Retirement Adviser head of retirement planning Nick Flynn says: “It is a natural step on from the work that the FSA did on insurers. It is definitely useful.”

But he says that as Sipp contracts are more likely to be handled by IFAs than insured contracts, clients are probably more aware of the options open to them under the Omo.

Recommended

Bankers warn of impact

The British Bankers’ Association has questioned if the FSA’s response to the banking crisis will strike the right balance between financial stability and allowing banks to support the economy.

Wedding present

As under-pensioned Britons come to realise just how expensive buying an annuity income actually is, we are going to see a trend towards even middle-class people making the most of what the state has to offer. For many cohabitees at or approaching retirement, this could lead to a walk down the aisle or a short trip to the registry office at least.

Mills starts action on Coutts case

Business tycoon Sir Keith Mills has initiated legal action against Coutts & Co over advice that led him to invest £65m of his savings in AIG Life premier bonds.

Global income: preparing for a rate rise…

In the five years since we launched the Artemis Global Income Fund, its manager Jacob de Tusch-Lec has built a distinctive portfolio that is first among its peers. Here he explains why his “quality, cyclical and value yield” stocks, and flexible approach, leave the fund better placed to benefit from uncertainty than funds that depend […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment