The DIY SSAS?
I blogged not so long ago about SSASs not being regulated, potentially doing investments SIPPs wouldn't touch, all familiar stuff you might say, but I think it's becoming more apparent that people are seeing this as a loophole for getting away with things which wouldn't be possible in a SIPP.
We've turned down 2 investment propositions recently, one a landbanking scheme in Brazil and one a third party loan we weren't happy with, and both are moving to SSASs elsewhere, presumably with the freedom to go ahead with these investments without the nuisance of a SIPP provider wanting to carry out thorough due diligence.
When you think about this, this difference between a SIPP and a SSAS is bigger than first appears. For a start, the SSAS operator need not be a trustee of the SSAS in the same way or even act in the capacity of Scheme administrator as it would be under a SIPP, removing the inconvenient matter of having to sign up to the investment as a trustee. The SSAS members can be the only trustees and hence invest the money where they want.
An extension of this is that the client doesn't even need an outside SSAS operator, they can set it up themselves, run it themselves and do what they like with it (within HMRC rules of course, but it's down to them to interpret the rules). I haven't checked to see if you can go so far as to download specimen SSAS trust deeds yet from the internet, but certainly a DIY SSAS is a real possibility.
One argument could be that this action is being taken to avoid prohibitive SIPP or SSAS administrative costs? Maybe; but in practice we find the motivation is the increase in control - for example the same trustees will often still have SSAS accounts prepared (at a cost exceeding our own SSAS fees and also not an HMRC requirement) but dispense with an interfering SSAS provider.
What worries me is that this is starting to become common knowledge. Unusual investment turned down by your uncooperative SIPP provider? Set up your own SSAS and do what you want. Simples!
Don't get me wrong, I'm not against SSASs, we run many of them ourselves and in the right circumstances they are very valuable, but the important point is that we run them to the same standards as our SIPPs. It seems bonkers to me that SIPPs and SSASs are virtually identical but SIPPs are very heavily regulated whereas a SSAS, with a bit of careful planning, can more or less do as it likes.
Factor in the juicy pot of protected rights monies out there which can now be directed to a SSAS and I'd like to think that the FSA are aware of this and are planning changes, but I think they need to get a move on, currently there is a loophole which is going to be increasingly exploited. The SSAS being the big brother of SIPP and established as a positive in pensions for the better part of 40 years simply cannot be left to be the dumping ground for unregulated misselling.