Sipp provider trade body Amps has launched a scathing attack on the FSA and warns proposed changes to provider illustrations will increase costs and create confusion for consumers.
The regulator’s final proposals for improved Sipp disclosure, published in November, will require all personal pension schemes to produce key features illustrations, effect of charges and reduction-in-yield information.
Sipp operators will also need to spell out any bank interest or commission they retain on members’ funds. The rules are due to come into force on 6 April.
In a letter to the FSA dated 1 February, seen by Money Marketing, Amps chairman Andrew Roberts warns the new requirements will drive up costs for providers and, ultimately, consumers. He estimates the cost of implementing the changes will be £2.8m, with additional ongoing costs of £2.7m a year.
Roberts also raises concerns plans to allow Sipp operators to choose “reasonable” projection rates for assets which are hard to value will create “spurious levels of accuracy” which investors will be required to interpret.
He says this could allow providers to “manipulate” illustrations to their advantage.
Roberts ends by criticising the FSA for failing to listen to the industry during the consultation process.
He says: “At the liaison meeting [with the FSA] we were informed that the consultation process is not a democratic one.
“However, we would expect where the industry expresses such grave concerns about the impact on consumers that the FSA might take stock and engage with the industry to find a solution.”
Forty Two Wealth Management partner Alan Dick says: “It is vital that comparability between Sipps is improved. At the moment it is almost impossible to compare different products and in my view that has already resulted in huge amounts of misbuying.”
An FSA spokesman says: “We will be responding to this letter shortly.”