The regulator has acted responsibly and sensibly to date. It made clear its thoughts as early as 2010, voicing concerns over loose controls on investment policy and mooting ideas on capital needs in the SIPP industry, and has continued to do so in public and behind closed doors.
For those following the SIPP market – all 120 or so providers – it cannot have escaped attention that change is happening. Larger, stronger providers are continuing to grow and expand their businesses and broaden their propositions. For the first time they are starting to take business from other SIPP providers, as well as their traditional domain of pension transfers and consolidation. One only needs to compare the last Money Management survey to this one to see the change.
The anticipated new capital regime will add a significant layer of cost, more for some than others, and this means market consolidation has never been closer. Some small deals have already taken place and larger ones will follow.
A series of events is being set in place that will pave the way for a – largely – orderly transformation of the SIPP industry. The next couple of years will finally see the true effect of regulation in the SIPP market. There will be fewer yet larger, better-positioned, better-capitalised, stronger SIPP providers and this will ultimately lead to better outcomes for both advisers and investors.
There really are SIPP providers of genuine quality in the market today, those that can service the needs of all an adviser’s clients and who are committed to the market and their customers for the longer term. They are also the ones most likely to play a role in saving investors from less secure parts of the market.
Advisers will need to be more careful than ever to make sure their due diligence is sufficiently robust to find them. Choosing a SIPP provider that is not reliant on a few unregulated investment providers to prop up their business would be an excellent place to start.
Greg Kingston is head of marketing at Suffolk Life
