Sipps firms should be penalised for lack of transparency

Sam Brodbeck 700x450

It’s fair to say the Sipp market can be a tad bitchy. When there are that many providers and only so much business, inevitably firms will go out of their way to point out the weakness of their rivals.

But a story Money Marketing ran last week produced a new target.

Research consultancy Finalytiq’s first review of the Sipp market ranked 18 firms from A to D.

The three firms branded with a D – @SIPP, Carey Pensions, London & Colonial – quickly got in touch to discredit the findings.

With tongue presumably rammed into his cheek, L&C head of product Adam Wrench said the firm “applaud the business model of Finalytiq” but would continue to provide advisers “with the facts free of charge”.

An @SIPP spokeswoman said Finalytiq’s data was “out of date and incomplete”, while Carey Group chief executive Christine Hallett opined “I will be amazed if anyone purchases this report which as I say provides no value to anyone at all”.

Strong words indeed.

The report itself rests on nine criteria – including profit margin, market share and capital reserves. Five of these are drawn from publicly available data, Finalytiq founder Abraham Okusanya explains.

If firms failed to provide information they were given a zero rating, however in many cases even those that did give up data still failed to score. For instance, if firms held the bare minimum required by the FCA under the new capital adequacy rules they were given zero, the same as a firm that did not disclose.

Okusanya says: “The suggestion that they scored poorly because they haven’t supplied the data is nonsense. There are firms in there who did not supply data who performed really well, such as Xafinity.”

He adds: “There is going to be increasing focus on this area from advisers in terms of due diligence. My advice to providers who say this is too much is ‘if you can’t stand the heat, get out of the kitchen”.

One Sipp provider told me they had “engaged from day one” because the industry “needs this type of independent, centralised information”.

“The information they had on us was about 95 per cent right so we just updated the figures and filled in the gaps. If you’ve got nothing to hide you should be happy to provide the information.

“I imagine the people who did not provide information did so for a reason.”

It would be shameful for a journalist not to always push for greater transparency, but in this case the argument is undeniable.

Advisers should not have to hunt for information buried in company accounts and if someone wants to do the hunting and charge for their findings, good luck to them.

Likewise, it is a bit rich for firms to refuse to give up important data and then moan when they are penalised for it.

The acid test is whether when Finalytiq publishes an update later this year, those recalcitrant providers play ball, or go off in a huff.

I know what I’d do in their place.

Sam Brodbeck is head of news at Money Marketing