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FSA will plug the gap until Sipp regulation

Regulator says it wants to rule over the Sipp structure but not the range of products within

The FSA says it will use its treating customers fairly initiative and financial promotion regulations to plug the gap between A-Day rules and the regulation of Sipps.

At a Treasury select committee meeting this week, FSA chairman Sir Callum McCarthy admitted to MPs that the year-long gap between A-Day and the regulation of Sipps could lead to misselling.

He said the regulator does not yet know what the new regime will look like because the Treasury has not finished consulting on the regulation of Sipps, leading to the “near certainty” of a time gap.

FSA chief executive John Timer said many Sipp providers are already regulated by the FSA so general TCF rules will come into play during the regulatory gap.

For those not already directly regulated by the FSA, Tiner said the regulator has a financial promotions remit and will refer companies it is worried about to the Advertising Standards Authority. He also said the regulator will give strong signals to companies outside its jurisdiction, making them aware it will take into account behaviour during this window when it eventually takes on regulatory responsibilities.

McCarthy said he hoped that the FSA will only be responsible for regulating the wrapper structure of the Sipp and not its contents as it would be a “deeply unattractive” prospect if the FSA were responsible for a whole range of products it knew little about.

He said: “There are two questions we are concerned about. First, the Treasury has not finished its consultation leading to the near certainty of a time gap and second, it is important to define the FSA’s responsibilities which will hopefully be to regulate the structure rather than the range of products within.”

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