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Terms of Business


We feel keeping up with FSA expectations is generally a positive selling point for us, but one of the downsides is when we are perceived to be making a nuisance of ourselves asking for things which others don't ask for. The difficulty we have is that with SIPP regulation barely 5 years old, standards across dozens of providers can be variable.

Terms of Business with fund managers are a good case in point. The FSA have made it clear that they expect SIPP operators to have agreements in place with any fund managers who have discretion over the assets which will be held in the fund. These agreements will cover a range of "good housekeeping" items and most importantly will avoid investments being purchased which are potentially inappropriate or in breach of HMRC rules.

Now we feel the regulator providing much needed clarity on this (not always the case) is a good thing but the trouble is, many SIPP operators (and some fund managers for that matter) aren't aware of this, so when we try to put terms of business in place we sometimes get the response "no one else asks for this". Even when we do convince them that it's necessary, we can find ourselves starting from scratch with a legal department who haven't really come across this sort of thing before, and the whole thing can become something of a palaver.

Factor in an adviser and client keen to get the money invested, with us saying that we need the terms of business in place first, and it is a formula for much aggravation. ("why are Curtis Banks being such a pain, I'll go and do my SIPP business with XYZ Ltd down the road who don't cause problems with this sort of thing" etc etc). As always we would urge caution when rushing to a provider who does not ask too many questions as what may be perceived as flexibility may be simple corner cutting

Of course lots of fund managers are fully clued up on this and putting terms of business in place with them is straightforward and we already have terms in place with over 60 investment managers. I'm just saying that it's not always that easy.

The moral of the story is that if we are asking for something it's always for a good reason, and not to make a nuisance of ourselves. Also if someone says to you "other SIPP providers don't ask for that", it might not be a case of those other providers being really flexible, and more a case of them not knowing what is expected of them. In short provider flexibility is a good thing but provider irresponsibility certainly is not.

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