Rival firms clash over Sipp cap-ad property rules

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Rival Sipps firms are at loggerheads over how the FCA treats commercial property.

The regulator is introducing a new capital framework for Sipp providers from 2016 based on the amount of standard and non-standard assets held.

But the industry is divided over how commercial property should be treated and in June the FCA published guidance as part of a quarterly consultation. It said the “key consideration” is whether the assets are “capable” of being readily realised within 30 days.

The Association of Member-Nominated Pension Schemes’ response, seen by Money Marketing, reveals the body thinks commercial property should be considered standard.

Amps chair Neil MacGillivray says: “You don’t want to hold more capital than you have to, you can do other things with that money. It’s the esoteric assets that are causing the issue, commercial property’s been there since the start of Sipps and will it can be complex to administer it’s not the problem.

“It would appear wrong to have to classify it in such a way as to hold additional capital. For a lot of smaller bespoke Sipp providers it’s a major issue. Where as some of the traditional life companies that have moved into Sipps and the platform providers, a lot of them do not touch commercial property.”

However some providers – including Legal & General-owned Suffolk Life – think commercial property should be treated as non-standard.

Suffolk Life head of communications and insight Greg Kingston says the industry has to be prudent.

He says: “Investors should demand that their chosen Sipp operator has both sufficient capital and the means to invest for the future.”