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Sipp firm forces clients to pay for cap-ad changes

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A Sipp firm is charging its members a one-off £215 fee for work it has carried out to comply with capital adequacy rules.

In a letter to members, seen by Money Marketing, GPC Sipp managing director Kathryn Taylor says the fee will either be deducted from the Sipp account or have to be paid directly to the company.

Taylor writes: “As a result of, as well as in preparation for, these mandatory changes we have undertaken extensive work on our systems and internal procedures to categorise each and every Sipp member’s asset class and, together with other Sipp providers, we have provided and continue to provide the FCA with increased volumes of data.”

She adds: “I confirm over the past year we have worked tirelessly on our systems and have now completed all the work that is now expected of a Sipp provider to comply with the new changes.”

The FCA’s capital adequacy rules come into force on 1 September and base solvency requirements on the proportion of standard and non-standard assets held by Sipp providers.

MoretoSipps principal John Moret says: “No question that Sipp businesses as a whole are being squeezed. But to impose a charge in the way this appears to be levied, I would have thought  a lot of advisers would have baulked at that.”

Syndaxi Chartered Financial Planners managing director Robert Reid agrees there are likely to be objections to paying the fee.

He says: “It would be different if they had found they were underneath what was an acceptable level for capital adequacy and had to deal with it. In this case it looks like they have been told the capital adequacy is likely to be and they have got to achieve it. That is where the key difference is.”

In May, Money Marketing revealed research from consultancy Finalytiq that showed a number of Sipp providers’ business models were unsustainable with Carey Pensions, @Sipp and London & Colonial named as those likely to struggle.

GPC Sipp was unavailable for comment.

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Wow!!! What a cheek!!!!

  2. And?

    Any business derives its revenues from its customers. If you impose regulatory costs (or indeed taxes) on the suppliers of goods and services, these will always be paid by the consumers.

    It looks as if GPC are merely ‘un-bundling’ their regulatory costs here, instead of trying to mask them in their ongoing charges. If it was so important that commission was unbundled, why are those bringing transparency to the nasty issue of compliance costs being pointed at in this way?

    GPC’s clients can now see in a very real way that regulation is expensive for consumers. Well done GPC.

    • I agree absolutely. Perhaps we should all charge separately for the compliance costs that are forced on us, too often for no good reason.

    • I think I might do likewise with our next FSCS levy. Can you imagine the response…..can you imagine the ‘revelation’ this will be to some clients who think there’s a magic pot of money that’s funded by the fairies at the end of the garden. If only I had an MP or two as clients…..hmmm.

  3. Of course costs are passed on to the consumer !

    And in the spirit of transparency GPC are letting the consumer know. I to let my clients know exactly how much these FCA, FSCS and regulatory bureaucrats cost them and why, they, the good, have to pay for the bad, again this purely down to regulatory incompetence, £500+ million a year budget and un-accountability !

  4. I think it is fair and reasonable too though it may be a moot point regarding whether it was all necessary in the first place. The FCA would argue that it is to protect the consumer but it is right that the costs of this protection is quantified.
    Just had our FCA fee this morning and told an employee that his pay has had to be dropped by £2,000 to pay for his share of it! OK I was joking but was is true is that his pay is £2,000 less than it otherwise would be – as is mine…..

  5. We started quoting and charging a regulatory premium fee pre RDR we still do as we spend a lot of it on CII studies and exams to keep our knowledge current and to pay for the exams of our new entrants, not to mention F-pack fees, PII and all the other costs of being in business, the actual advice part is the small bit, it’s all the other hangers on (including F-pack) that cost all the money. If we weren’t regulated and could just sit on a bar stool and pontificate, advice would be cheap (I’d practically give it away for free or perhaps a pint and a bag of pork scratchings), but the bar room adviser, like the barrack room lawyer does not have to deal with the complaint system we now have.

  6. As A side issue but a valid point (I believe)

    A bit of sloppy and headline grabbing, by using the words, “forces clients” shame on you MM !

    More realistic quote would be; “Has been forced to charge its clients”

    I don’t think the FCA should be and continue to be absolved from the upward spiraling costs, of financial advice and products, when they are the main culprits and the reason why !

  7. Sorry, but it seems unbelievable to me that you can enter into a contract to provide a service, then part way through, you charge aditional fees for regulatory work that surely you’ve known about for sometime and is part and parcel of providing the service. My personal gas and electric is on a fixed contract, if they slapped me with an additional charge for their regulatory work, I’d be livid

    • What would do Phil is complain, get your money back and go put your money in the bank ! Or better still under the mattress, and with the interest go buy a pint in the local pub

  8. Sorry, but imagine your gas and electric supplier did the same mid contract, there’d be uproar. And rightly so

  9. Hmm, looks like I’m on my own here, so might be time to tuck into some humble pie.

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