James Hay has hiked charges on its Sipp products to meet the growing cost of complying with regulation.
Fees on the provider’s MiPLan, MiSipp V1 and iSipp products will increase following the FCA’s thematic review, the regulator’s ‘Dear CEO’ letter to providers last July and new capital adequacy coming into effect in 2016.
As a result James Hay says it needs to hold more capital for non-standard investments, increase due diligence on certain investments and use more resources on monitoring investments.
Customers will be charged £350 a year if they want to invest in non-standard investments, compared to £50 currently. Non-standard investment transaction charges will rise from £250 to £350 for unquoted shares and from £50 to £500 for non-mainstrain pooled investments.
The provider is also changing which external fund managers are on its panel. Selftrade, Stocktrade and Santander Sharedealing will be on the panel, and if advisers want to use other managers they will pay £100, plus VAT for Isas and GIAs, up from £50.
The changes are expected to take effect from the end of May, while customers will be told in mid-April.
The provider says 6 per cent of customers will be affected by the price changes relating to the investment manager panel, while just 1 per cent will be hit by the increase to non-standard asset fees.
James Hay marketing director Chris Smeaton says: “We’re adopting a fairer approach to managing a platform so people pay for the complexity they use. When the FCA made changes to its guidance all Sipp providers have to change their processes and procedures and these fees are reflecting that.
“There is a significant admin burden here. I’d expect other providers either to stop these types of investments or increase their fees – we’re being honest and I expect other providers to follow suit.
However, several Sipp providers Money Marketing spoke to said they will not be changing their fees.
Dentons director of technical services Martin Tilley says the firm does not intend to raise charges. However, it has added a £50 “HMRC reporting fee” for some non-standard assets.
He says: “We revised our fees on 1 January which were pretty much in line with Inflation since the last increase. Our vesting fees under flexi access drawdown are the same or lower than our vesting under capped drawdown, and the only fee we didn’t have before is a £50 HMRC reporting fee on certain non-standard assets. We have also maintained the interest rate payable to clients unaltered.”
Barnett Waddingham head of Sipp business development Andy Leggett says: “We currently have no plans to increase fees in connection with the new capital adequacy regime coming into effect in September 2016. Of course, the Sipp market is a dynamic one and a lot could happen in the 18 months between now and then.”