FCA rules out ban on unregulated or non-standard SIPP investments

FCA has revealed it is concerned about non-standard investments in SIPPs but has no plans to ban them. Hannah Godfrey finds out more...

The Financial Conduct Authority (FCA) has revealed it is concerned about non-standard investments in self-invested personal pensions (SIPP) but has no plans to ban them.

In a letter to Work and Pensions Committee chair Frank Field, FCA executive director of supervision Megan Butler (pictured) said while the FCA is worried self-invested pension savers are a potential target for scams, it has no plans to bar unregulated or non-standard investments from inclusion in SIPPs.

Butler said there are about £5.97bn of non-standard assets in SIPPs as of September 2017.

She said this made up approximately 2% of the total £300.21bn of assets under management within the largest contract-based SIPP operators.

Butler said: “We are not currently considering barring unregulated or non-standard investments from inclusion in SIPPs.

“We believe suitable advice from financial advisers accompanied with effective due diligence checks by SIPP operators is a more proportionate way or preventing harm to consumers rather than imposing a ban.”

Butler pointed out not all non-standard investments are high risk, some, she noted, are deemed non-standard because they are not capable of being liquidated within 30 days, such as investments in commercial property.

Butler said SIPP operators are obligated to assess if there are problems with an investment and/or introducer, and by carrying out that due diligence, are required to take appropriate action if need be, like declining to proceed with an investment.

There are several cases involving SIPP providers currently going through the courts, including a case involving Carey Pensions, which has been accused of using a Spain-based unregulated introducer to facilitate investments in Store First unit pods.

The case may prove especially significant, as commentators have suggested it could shape the handling of future SIPP mis-selling claims if the judge rules against Carey Pensions.