18 June 2009
The Financial Services Authority (FSA) is undertaking a review
of around 70 small Sipp providers to identify whether they are
meeting its regulatory requirements.
As part of the investigation, which is being led by the FSA's
small firms division, providers must answer a questionnaire and
submit promotional material and other documentation.
The FSA says a further 100 medium to large Sipp providers are
exempt from the investigation because they are relationship-managed
by the regulator.
Syndaxi Chartered Financial Planners managing director Robert
Reid believes the FSA will be looking at the fact that many Sipp
providers take a slice of the interest rate received on customers'
cash accounts.
He says: "The FSA will definitely be looking at the level of
interest that Sipp providers are taking on bank accounts and where
that has been used to subsidise charges as opposed to charging a
straightforward cost. That practice is very opaque and the smaller
firms tend to take a bigger cut."
AJ Bell marketing director Billy Mackay says: "The key issue is
the way that companies promote their products. The regulator will
be looking to see that any promotions truly reflect the nature of
the risks involved. It will also look into whether small firms are
providing customers with sufficient information about the nature of
their charges."
An FSA spokesman says: "This work aims to assess whether small
Sipp providers are adhering to FSA principles and rules and to
identify any issues that require our attention or intervention. If
we find any issues that cause us concern we will take the
appropriate action."
