Long Time Coming
Sometimes I've wondered if I have been going too far in recent blogs when pointing out the shortcomings in sectors of the SIPP industry. Was I being too negative? Are some providers really that bad?
The answer arrived with the findings of the FSA Thematic Review on SIPP operators. You only have to read the first page: "poor compliance with regulatory requirements", "poor systems and controls", "inadequate controls over investments". Sounds like I wasn't going too far after all, more like I wasn't going far enough!
Anyone who has been at the sharp end of SIPP operations for the past few years will have seen this coming; I don't take credit for being the only one who saw the writing on the wall. The more responsible providers who embraced the regulatory culture (it wasn't going to go away!) like ourselves and some others have been well aware of FSA concerns and have invested in their systems and infrastructure to stay ahead of the game.
Of course this is no time for complacency, we will use this time to review all our processes in the light of the FSA report, but suffice to say that the report did not come as a surprise and the hard work we have done on putting robust processes in place should stand us in good stead for the future.
Judging by the FSA report, the same cannot be said of some other providers - again no surprises there. Interestingly the FSA are addressing this by a series of workshops for SIPP operators, presumably taking the view that an education programme to improve standards is less damaging than the potential fallout from widespread punishment?
What will the outcome be? Hopefully education will lead to improved standards and a levelling of the playing field - by that I mean all providers operating compliant systems and controls which should lead to some parity on fees and perceived "flexibility". One would hope that this would lead to comfort for clients in that the whole industry is doing a good job and an end to the misnomer that a SIPP provider asking fewer questions is a positive thing.
Another outcome is likely to be an increase in the rate of consolidation, with the prospect of painful face to face contact with the FSA, together with all the other worries (increased capital adequacy, RDR etc) leading many providers to conclude that it just isn't worth soldiering on.
Good news that the FSA are finally getting to grips with this, let's hope that it quickly produces a positive outcome.