The beginning of February saw the FCA issue a discussion paper DP18/1: Effective competition in non-workplace pensions. Within the discussion paper, the FCA estimates that non-workplace pensions amount to around £400bn in AUM, double the amount invested in DC pensions schemes.

The FCA have asked for feedback across a range of stakeholders so they can understand the market for non-workplace pensions better, including whether competition is working well and if there are issues that need to be addressed in order to protect consumers.

As you can imagine, there is a particular focus on the SIPP market in part due to the increase in volume and popularity since the introduction of RDR in 2012. These more than doubled in 2013 and continued to rise to 794,000 SIPPs by 2016. The later increases are likely to be due to consumers switching products, from older style personal pensions or defined benefit schemes so that they can access the full flexibilities available under pension freedoms.

Since I came into the pensions sector, there does seem to have been constant change, consultations and reviews. So when this latest discussion paper hit my inbox, I have to admit to thinking, not again. But after this initial reaction, I did change my mind and realised that what is important in all of this is the consumer, and ensuring that they are saving in the best environment possible. So the FCA is right to continue to look at this ever-growing market and protect consumers and aid the providers with a regulatory framework that is fit for purpose.

The FCA and its predecessors including the FSA have addressed a number of issues in the pensions market over the years and focusing on competition and competition and pricing seems a good thing.

They highlight that there are weaknesses and reduced competition on charges and that there are aspects they can see parallels with the findings of the OFT study on the DC workplace pensions market in 2013 which concluded that competition alone could not be relied on to drive value for money and good outcomes for consumers of DC workplace pensions. Although they do highlight that they understand the important differences between the two markets.

I personally don’t think this discussion paper is a big issue for the SIPP sector, in the past 25 years it has continued to evolve and make them less likely to fall foul of any changes that might come following this review. The SIPP capital adequacy requirements that came into force had a big impact; on the market, you could argue it has taken out those firms who were perhaps not financially strong enough or you could argue that it has restricted competition.

For those that have remained in the market place have reviewed what investments they allow and I am sure we have all looked at our business models and are constantly review services and fees.

Elaine Turtle, Director, DP Pensions