View more on these topics

Industry’s challenge to join together and protect Sipps

Sipps have been around for almost 30 years now and are still very popular despite the well-documented issues facing a small minority of providers.

It was reassuring to hear FCA director of life and financial advice Deborah Jones say at a recent Select Committee meeting that the regulator believes there is a place in the market for a “wide range of investments”, including in Sipps, but that it is important riskier products are only sold to suitable consumers.

The FCA holding the spotlight on the Sipp sector is a good thing and I agree with Jones that the product should only be available to those it is suitable for.

Sipps must stop being a gateway to bad investments

It is unfortunate that we have ended up where we are but this is in part due to some Sipp providers having built their book of business very quickly but on loose foundations. They took the easy option and accepted the business offered by the promoters of unregulated investments who were able to introduce dozens of new clients each month. In addition, a number of providers have written business on very low-cost terms in an effort to build scale as quickly as possible.

While this may look like a good deal for clients, ultimately, that provider has to make a profit at some point if it is to survive as a business and meet both its capital adequacy requirements and professional indemnity cover.

The aim might be to grow and sell on the business as quickly as possible but, as we have seen, selling a stricken Sipp business is no easy task. Ultimately, the clients of that stricken business suffer.

It would be unfair to say that all unregulated investments are unsuitable. There is still a place for them as clients and advisers look for more attractive returns. Some providers will still consider them but there will be a more vigorous due diligence process.

FCA opposes ban of unregulated investments in Sipps

This is why it is crucial for clients and advisers to be very careful when they are assessing the provider they are considering using. Cheap is certainly not “cheerful” in the Sipp world, as we have seen a number of times now.

The adviser needs to ensure there are robust systems and processes in place, that the provider’s Sipp book does not contain distressed or toxic assets and that they are committed to the long-term future of the sector. We are likely to see more consolidation in the market and it is the high quality, responsible and successful providers that will thrive.

Given the benefits of using a Sipp and the potential impact of the negative coverage, what is most important is for the advice community and Sipp providers to come together and protect the sector for the good of those clients that want the flexibility they can offer.

David Fox is director of sales and marketing at Dentons Pension Management

Recommended

House-and-Calculator-Mortgage-Property-700.jpg
5

Aviva criticised for ‘extraordinary’ commercial Sipp restrictions

Aviva’s decision not to allow commercial property to be included in drawdown or when clients want to access tax free cash through their Sipp has come under fire. Money Marketing has seen correspondence between an adviser writing on behalf of their client and an administrator from Aviva’s commercial property investment team. The correspondence concerns Lowland […]

3

What is the average salary for a UK financial adviser?

Research shows average total earnings for employed financial advisers reached £93,100 in 2017, up from £81,500 in 2016. For self-employed financial advisers, the figure was up nearly 4 per cent year on year to £89,100.  Around 500 advisers and 150 paraplanners took part in research led by recruitment consultants BWD alongside Money Marketing, taking the […]

2

How to become a financial adviser: diplomas, degrees and workplaces

Information on how to become a financial adviser is sparse. Money Marketing speaks to advisers about what the requirements really are and how best to meet them. Speaking to financial advisers and planners today, each will have a unique and varied story about how they entered the profession. There are more than a handful of pathways […]

Unfinished business?

Pension specialist Fiona Tait gives an update on three big announcements from the 2016 Budget – Pensions Advice Allowance (PAA), the Lifetime ISA (LISA) and the pension dashboard. £500 Pensions Advice Allowance What’s new Under current rules it is possible to deduct an adviser charge from a defined contribution pension fund to pay for financial […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Julian Stevens 6th March 2019 at 7:09 pm

    As others have opined, most people don’t need and very probably shouldn’t be allowed anywhere near a SIPP. Access should be restricted to demonstrably experienced and sophisticated investors only.

    One only has to look at the list of investments permitted via James Hay’s SIPP and then ask just how many of them are likely to be remotely suitable for most ordinary investors. Gold Bullion? PIB’s? Shares in AIM and PLUS Stock Exchange companies? Pooled Investment Syndicates where the member cannot influence or control the investment (known as Genuinely Diverse Commercial Vehicles)? TEP’s? Shares in unquoted private companies? Come off it ~ who needs those? Best advice to most clients is to steer a mile clear.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com