The FCA has published a letter sent by Clive Adamson, its Director of Supervision, to the CEOs of operators of self-invested personal pensions (SIPPs). The letter sets out the findings of the FCA’s recent thematic review of SIPP operators following the guidance it issued in October 2013.
In the review, the FCA focused on:
- the due diligence procedures SIPP operators used to assess non-standard investments; and
- how well firms were adhering to the relevant prudential rules.
The FCA found that a significant number of SIPP operators are still failing to manage these risks and ensure consumers are protected appropriately, despite its recent guidance. The FCA has already discussed this with the firms concerned, explaining that these failings are unacceptable and need to be addressed, but it is now writing to the CEOs of all SIPP operators because its thematic review indicates that these failings continue and are widespread, despite previous communications.
The FCA has already required several firms to limit their business as part of its thematic review and in some cases has begun enforcement investigations. Over the coming months it intends to visit more firms, and expects to see significant improvements. It will also build these areas of focus into its regular supervisory work for smaller (C4) SIPP operators, so it has an opportunity to engage with every firm, and it will use this work to review firms’ actions.
The letter also asks firms to review their business in light of these findings. It states that the FCA expects firms to specifically review that:
- when they undertake non-standard investment business, they have adequate due diligence procedures in place to assess these investments; and
- the capital position within the firm is being accurately reported.
View Action required: review of Self Invested Personal Pensions operators, 21 July 2014