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Sippchoice latest firm to charge customers to meet capital rules

Money-In-Hand-700.jpgSipp provider Sippchoice is expecting investors to help cover the cost of its capital requirements through a fee it labels “FCA capital requirement loading”.

Sippchoice is the second provider revealed by Money Marketing to be charging a fee with GPC Sipp charging members a one-off £215 levy to meet the incoming capital adequacy requirements.

According to a fee schedule, the charge will apply from September 2016 and must be paid annually.

Investors must pay £10 per £100,000 fund value with a minimum annual fee of £25 and a maximum of £250.

The minimum fee applies to funds of £250,000 or less and the maximum applies to funds of £2.5m or more.

Sippchoice managing director Hyman Wolanski says most sipp providers will charge a fee related to the capital adequacy requirements but many may not declare it.

He says: “There is a cost to any business of holding more money. Any business is going to have to, one way or another, recover that cost. It is just a question of whether you do it implicitly or explicitly. Most people will probably charge implicitly and not highlight it in the way we have. We felt it was appropriate to highlight it.”

The FCA’s capital adequacy rules come into force on 1 September and base solvency requirements on the proportion of standard and non-standard assets held by Sipp providers.

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Comments

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

  1. So, I have a TCF question. Is it reasonable to charge ALL clients a cap ad fee? What if I only have standard investments in my portfolio (and therefore don’t, of myself, cause any cap ad impact on my SIPP provider)?

    What if my SIPP provider buys another firm’s business, causing the proportion of clients with non-standard assets (and therefore the cap ad requirement) to rise? Should I pay more because of that, whether or not I’ve been contributing before? My own portfolio and risk profile hasn’t changed, why should I pay more? But, OTOH, should the entire marginal cap ad increase be funded by the acquired clients – is that fair on them?

  2. I think it is probably fanciful to think that this market is not going to have to fundamentally change the way it charges fees from the point of the change in regulation and whether that’s a move to a flat annual levy or something linked to the size of fund, these could be argued to be models imposed on providers by the FCA. I agree that all SIPP Operators will probably be charging their clients to meet new Cap Ad requirements but some will continue to do so in less transparent ways and the bigger ones will certainly make the most of the issues around it in order to fuel consolidation and grown their books whilst further making the shrinking choices available to clients, increasingly uniform in their blandness.

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