As advisers and providers focus on their growth strategies for the year ahead, thoughts turn to what was successful over the last 12 months. One area of growth was new SSASs. But we may be seeing changes on the horizon.
2016 is likely to be remembered as the year the regulator got tough on scammers. For too long unscrupulous salespeople have preyed on investors with large pots of pension money. We have seen everything from overseas properties that do not exist, to agricultural land investment near Chernobyl.
With such volatile markets and the low interest rate environment, it is no wonder some investors have let their heads be turned and given over their life savings.
And while hugely positive for consumers overall, pension freedoms made the situation worse, with the scammers going direct rather than having to target them via a pension fund.
Prior to the freedoms, SSASs were a favourite of the scammers due to their perceived “less regulated” nature. But with the introduction of HM Revenue & Customs’ “fit and proper” administrator rule from September 2014, establishing and registering a SSAS became harder to achieve.
Despite these changes, the Government is still concerned about scamming. However, further steps are being taken and HMRC is now asking for even more information and documents before registering new SSASs.
Administrators will now receive a “notice to provide information and produce documents”, issued after the initial registration application. This two-stage approach will have a further impact on the time it takes to register a scheme.
The Government is also toughening its stance substantially. Take, for example, its consultation paper, issued in December, seeking views from the industry on the potential introduction of a ban on cold-calling and the implications it may have.
A ban can only be a good thing for the wider industry, for advisers and for the end consumer. But it needs to be done correctly. I see no difference in a telephone cold call, an email or a text, so this needs to be addressed too.
The statistics on the potential number of scams are eye-watering and anything that can be done to stop this trend in its tracks can only be welcomed. The fact HMRC and the FCA are working to improve the situation will have a positive impact on the industry and help to encourage long-term savings.
And despite the additional time taken to set up a SSAS, they have remained a very popular vehicle. I expect they will continue to do so throughout 2017.
Advisers use SSAS products for a number of reasons, including the ability to pool assets. This can be a significant advantage over, say, multiple individual Sipps. What is more, the ability to cascade assets down through the generations – particularly for family run businesses – remains a key proposition.
One issue getting ever closer is the potential attack on tax relief. This could not only have an impact on the SSAS market but more widely on the desire of consumers to save for the long term. A reduction in the amount people can pay in, or on the tax relief received, will likely mean fewer new cases and top-ups to existing business.
That said, there is no denying these are still a strong area of growth for advisers, so 2017 could be known as the year SSAS made it back to the big time.
Martin Tilley is director of technical services at Dentons Pension Management