The FCA has revealed new rules on capital adequacy for Sipp operators this morning which will come into effect in September 2016.
The minimum capital requirement for Sipp firms will be £20,000, rising from £5,000.
UK commercial property has been added to its list of standard assets, though providers will not need to hold additional capital in relation to this.
The key changes include:
- The initial capital requirement calculation should be based on the assets under administration (AUA) over the last 4 quarter-ends rather than at a set point in time. The FCA said this will reduce the compliance burden on firms and help avoid fluctuations in capital requirements
- The initial capital requirement constant has been adjusted to smooth the impact on smaller firms. Officials said this will mean a significant reduction from the capital requirements the FCA consulted on for most firms who administer less than £200m of pension assets
- Gold bullion, National Savings and Investment products, bank account deposits, units in regulated collective investment schemes and UK commercial property to be added to the standard assets list
- The new rules will come into force on 1 September 2016.
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The regulator said some firms will need to raise extra capital to comply with the changes and encouraged to start planning for this to ensure that they have sufficient resources in place.
The new rules affect aspects such as capital surcharge, initial capital requirement and the standard assets list.
Nick Poyntz-Wright, director of long term savings and pensions, said: "Under the current capital requirements we have a real concern that when a Sipp operator exits the market people's pension savings could be put at risk.
"The new rules we have put in place will help to ensure that firms carry sufficient capital to fund an orderly closure without having a knock-on impact on consumers' pension pots.
"We have listened to the industry since our initial consultation and made a number of changes to proposed rules to ensure that they will work for better for firms helping to ensure that consumers get the best protection for their pension savings."
The key changes are shown in summaries from the FCA below.
