FCA will use full powers to enforce cap ad changes

A Sipp expert has questioned whether the FCA has the resources to police the new capital adequacy rules taking effect in September and what punishments firms failing to meet the requirements will face. Jeff Steedman from Sipp firm Xafinity believes it has been left unclear how enforcement of the new rules will be carried out.After several years of consultation and debate, the new rules for Sipp providers are to be implemented by the FCA on 1 September.Mr Steedman believes there are many unanswered questions surrounding the way the regulator will handle businesses that have been unable to get their houses in order in time.He said: “Looking beyond 1 September do they (the FCA) have a clear plan on what action they propose to take?{desktop}{/desktop}{mobile}{/mobile}“Will they put that company under some scrutiny, some measures? Will they close them to new business? Will they support them? Will they give them a period of grace to put that capital required in place?“Do they have the resources to do so and do they have a plan for what action they will take if a provider doesn’t have the required capital adequacy? That will be a challenge for the FCA.”He said there were also questions to ask from the Sipp providers’ point of view about the transparency and clarity of their financial position.He said: “These firms might have multiple different businesses so what cash belongs to the Sipp part of the business and what belongs to perhaps their IFA arm or their other businesses?“Will that bank account that is holding that capital have to be sitting there on a cash account, deposit account or will it be as long as the company has the ability to borrow money to provide that capital?”Sipps Professional put Mr Steedman’s questions to the FCA.The regulator explained that each case would be examined on an individual basis and FCA officials would look at whether Sipp firms can repair their capital position or if they have to be wound up, in the event that they have failed to meet the new requirements.The FCA’s full supervisory powers can be used if a provider has failed on capital adequacy but officials will look at the most appropriate route to take for each individual business.

FCA will use full powers to enforce cap ad changes

Related items

News from Twitter