Sipp sector will feel 'dismay' after FCA reports widespread failings

There will be 'dismay' among those working in the Sipp sector, a key figure at Barnett Waddingham says, after an FCA fired a broadside over 'unacceptable' widespread failings. The FCA sent a damning letter to all Sipp operators yesterday telling them poor practice has put consumers' pension savings at "considerable risk".It comes after the regulator's third Sipp thematic review.The regulator said a significant number of Sipp operators were still failing to manage risks previously identified and have failed to ensure consumers are protected appropriately, despite its recent guidance.This followed a review last October.{desktop}{/desktop}{mobile}{/mobile}Many firms were found not to have the necessary expertise to assess high risk and non-standard investments and often failed to understand and identify the correct prudential rules, which apply to their business.Andy Leggett, head of Sipp business development at Barnett Waddingham, said: "The FCA's thematic review and its Dear CEO letter provoke mixed feelings."Negative publicity for Sipps – a pension success story – inevitably induces dismay."Although the criticism in this paper is more discriminating than in the second thematic review, which tarred the whole industry, many companies will feel it does not describe their operations yet leaves them questioning whether it is ever worth accepting non-standard investments whatever the amount of due diligence that has been conducted."He said: "The emphasis on preventing scams and fraud should remind official bodies that this is a joint responsibility across the FCA, SFO and more, not something to be conveniently off-loaded onto Sipp operators."In the run-up to the new capital adequacy rules, it is interesting that reference has been made to the existing prudential requirements. The rules are extremely complicated so genuine reporting errors are to be expected."We, like others, hold in excess of the required amount which help to protect against this."He said advisers should be wary of firms that set themselves up to avoid holding a prudential amount in capital.He said: "We can envisage this report as the first step in action being taken against Sipp firms that participate in such tactics."

Sipp sector will feel 'dismay' after FCA reports widespread failings

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