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Moret wants Sipp scope to be restricted

MoretoSipps principal John Moret is urging the FSA to limit the type of financial institutions that can be approved as Sipp providers.

The concerns follow two high-profile Sipp-related investments in March which leave up to 2,500 investors exposed to losses of up to £92m.

On March 21, Money Marketing revealed around 1,000 investors in Arck LLP could face losses of £60m after a liquidator was appointed for the specialist property investment firm. Many investors used their pension savings to invest in the scheme through Sipp firm HDSipp.

On March 28, Money Marketing revealed another group of investors are facing losses of up to £32m after the Serious Fraud Office appointed administrators to wind up a number of related “sustainable” investment companies. A total of 1,500 people, mostly Sipp investors, could lose out as a result of the collapse of the firms that invested in biofuel companies in South-east Asia.

Moret (pictured) says the regulator should introduce stricter requirements for firms wanting to operate as Sipp providers.

He says: “The regulatory regime for Sipps was introduced at great speed in 2007 without sufficient consultation and consideration for the various Sipp designs and operational complexities. This was on the back of the relaxations introduced by HMRC as part of the pensions simplification changes in 2006.

“Specifically, the creation of the new role of scheme operator without any financial or other safeguards coupled with a new pension legislative regime which allowed complete flexibility over investments, albeit with potential tax charges, was a toxic mix which was inevitably going to be exploited.

“The FSA should consider moving to a system where only certain recognised types of financial institutions could be approved as providers of Sipps.”

AJ Bell marketing director Billy Mackay says: “I agree in principal with what John is saying. However, the regulator will want to see detail of how stricter criteria would protect consumers.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. “The FSA should consider moving to a system where only certain recognised types of financial institutions could be approved as providers of Sipps”

    Didnt this use to be the case before 2006/07? I recall it being much stricter.

    Does the problem really lie with the SIPP provider or the advisers / investment providers using them?

    Something does need to be done and I would much rather see the SIPP provider community (via AMPS?) taking a stand against “dodgy” investments.

    The ones who still allow perceived dodgy investments are the companies the FSA should be looking at.

  2. Capital adequacy should be increased to at least 1 year for SIPP providers. That should help stop 1 man and his dog operations

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