On 4 November 2024, the Financial Conduct Authority (FCA) published a portfolio letter to CEOs of self-invested pension plan (SIPP) operators, setting out a summary of its priorities, its expectations of SIPP operators and the work it intends to do.
The FCA flags that this is an important supervisory portfolio for the FCA as the SIPP product can play a key role in enabling consumers to plan for their retirement with a greater degree of flexibility and control; however, average SIPP pension pot sizes are often higher than other types of person pension meaning harm to individual consumers can be greater when issues materialise. In light of this, the FCA wants the SIPP portfolio to deliver high standards and for consumers investing in SIPPs to do so with confidence, understanding the risks they are taking, and the regulatory protections provided.
New key focus areas highlighted in the letter include:
- Redress payments to consumers for due diligence failings.
- The handling of pension scheme money and assets.
- Accuracy of firms’ books and records.
- Implementation of the Consumer Duty.
The FCA reminds CEOs that they are responsible for ensuring their firm meets FCA requirements, including the obligations and requirements set out in the letter, and that they should take all necessary action to ensure they are met. The FCA warns that it may ask CEOs to assess their business against these areas of concern and explain the actions they have taken, using the Senior Managers and Certification Regime to engage directly with accountable individuals on specific areas of concern.
The letter concludes by noting that the FCA’s proactive strategy will focus on the areas addressed in this letter and its previous May 2023 letter, and it will expect firms to demonstrate how they have fully implemented the concerns highlighted in the firm’s work plan.