In a move to protect consumer interests, the Financial Conduct Authority (FCA), formerly the Financial Services Authority (FSA) has told Self-Invested Pension Plan (SIPP) providers to improve their practise or face regulatory action.
This came after the FCA found particular pitfalls in relation to SIPP provider’s compliance with their regulatory requirements. Two particular areas of concern to the FCA were risk planning and mitigation.
An FCA statement has placed particular emphasis on the consumer stating that SIPPs need to demonstrate that they have the “best interests of consumers at heart.”
The FCA and formerly the FSA has been reviewing this area for some time after the responsibility for regulating SIPP providers fell to the FSA in 2007. The FSA had produced guidance on the regulation of SIPP providers which has not been altered by the formation of the FCA and the continuation of the thematic review.
The guidance covers systems and controls, client money, management information, conflicts of interest, relationship with firms that advise and introduce prospective members, due diligence and financial crime. With regards to due diligence specifically, the FCA has placed particular emphasis on unregulated collective investment schemes, due to the nature in which they operate and unregulated introducers.
For SIPP providers, this may not seem like a drastic change. Nevertheless, it is worth familiarising with the points raised in the guidance by the FCA and ensuring that all the key points raised are met in order to satisfy clients whilst also managing and containing any potential risk.
By Geoff May, serious fraud & business crime team