Treasury eyes P2P access for Sipps

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The Treasury has held talks with industry representatives about allowing peer-to-peer investments in Sipps, Money Marketing understands.

A group of senior industry figures were summoned by Government officials last week to argue the case for allowing P2P loans within a Sipp wrapper, Money Marketing can reveal.

A consultation on the proposal remains the most likely option, although sources say it could take up to two years to amend legislation to accommodate the rule change.

It is understood the central problem blocking progress on reform involves HMRC’s “connected party” rules.

Under existing legislation it is possible for a pension scheme to offer commercial loans provided these are not made to scheme members, ex-members or anyone connected with them.

However, in practice a pension scheme may be unable to determine whether an individual is connected to a member or ex-member.

A source says: “A group of representatives met with HMRC and Treasury to discuss a workaround for the connected party transactions rule that prevents Sipp providers from accommodating P2P loans.

“There was concern after the meeting that the Treasury may be indifferent to the demands of investors to take advantage of this asset class within their pension.

“Evidence was presented showing there is considerable demand among Sipp investors. There is billions of pounds of pension money that could go into the P2P lending market, if the Government would allow it to happen.

“The problem is changing primary legislation could take two years to amend, which obviously isn’t a great place to be.”

A survey carried out by Hargreaves Lansdown suggests P2P demand could be strong among Sipp investors. A poll of its own customer base found 56 per cent would be interested in using P2P access was offered.