View more on these topics

Sipp firms face huge cost

Tough proposals which could force Sipp providers to produce specific key features illustrations for many investment products would force half of pension administrators out of business, according to Standard Life.

The FSA published a consultation paper last week which looked at tightening up Sipp disclosure rules. It proposes a requirement for providers to supply illustrations and projections for all investments held within a personal pension scheme, other than comm- ercial property, commodity investments, synthetic exchange traded funds and shares.

The FSA says the reforms aim to create a more transparent personal pension scheme market and help with “better purchasing decisions” from customers or their advisers.

Standard Life head of pensions policy John Lawson says providers which use generic illustrations would have to produce “tens of thousands” of individual projections for clients or build an expensive system to comply.

He says: “This consultation has come out of left-field. Given that there are thousands, if not tens of thousands, of funds in the market, the difficulty will be projecting for any one given fund. The cost of it is enormous, I think this could put 50 per cent of Sipp administrators out of business.

“We are talking about costs in the millions of pounds to build a system which can do this. Any Sipp administrators that are not insurers will be thinking this is going to be horrendous.”

AJ Bell marketing director Billy MacKay says: “If you look across the market, providers who historically have not provided that information are going to have to invest time, effort and money in building it. There is no doubt it will stretch the resources of some firms.”

The regulator is also considering introducing a rule requiring personal pension scheme operators to disclose whether or not they receive commissions or retain bank account interest or money held within the scheme.

It says this information should be disclosed alongside data about fees, costs and charges payable, as well as bank interest receivable, by the client.

The paper suggests amending the disclosure rules that apply to the effect of charges and the reduction in yield information, so that disclosure is required by all pers- onal pension schemes.

The regulator will publish a policy statement in the second half of 2011, with any final rules set to come into force on April 6, 2012.

Recommended

James Hay adding online Sipp duo

James Hay & The IPS Partnership is launching two new Sipp products on February 14. The Sipp provider, which will also change its name to The James Hay Partnership, says it is unveiling the James Hay Partnership Sipp and the iSipp in response to market demand. The James Hay Partnership Sipp will be a full […]

Meteor kicks out top 10 Uk shares

Meteor Asset Management has brought out its top ten kick-out plan 5, a structured product linked to the performance of the top 10 stocks on the FTSE 100 index, by index weighting, as at January 21, 2011.

1

Matrix cleans up

Matrix Group is raising up to £25m through a linked offer for shares in the Matrix clean energy VCT 1 and Matrix clean energy VCT 2.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment