The “jury is still out” on whether the Financial Conduct Authority (FCA) is satisfied with the response from SIPP operators, watchdog chief executive Andrew Bailey said, following a letter he wrote their CEOs last year.
Speaking at a Work and Pension Select Committee meeting on pension costs and transparency today (6 February), Bailey was asked if he was satisfied with the response from self-invested personal pension (SIPP) providers to a letter he personally sent regarding failures in the industry.
Bailey responded by saying: “Honestly, the jury’s still out. The message clearly hit home because we got some clear responses. But the jury’s out in terms of practice.”
In October, Bailey wrote a letter to SIPP providers asking firms to consider the “potential implications” of the news the High Court had rejected Berkeley Burke’s claim against the Financial Ombudsman Service (FOS) decision from 2014. The FOS decision had ruled Berkeley Burke had to compensate a client after it failed to carry out appropriate due diligence on their investment.
FCA director of life insurance and financial advice Deborah Jones, who was also at today’s Select Committee meeting, confirmed the FCA was carrying out ongoing work with companies it was not satisfied with.
“We wrote a letter and we followed up with phonecalls to all the relevant firms and some site visits,” she explained. “There is ongoing activity with the firms where we’re not completely satisfied they are in the right space, to ensure they are in a better financial state to protect consumers.”
Despite concerns about the sector, Jones said the FCA believed there was a place in the market for a “wide range of investments”, including in SIPPs, but said it was important riskier products were only sold to suitable consumers.
She added: “Looking at the high-risk investments to revisit whether advisers are taking an appropriate approach is a piece of work we have planned for next year.”