The FCA’s SIPP Operator Portfolio currently holds over £205 billion of pension assets. Following a recent spate of failures of more complex SIPP operators, the FCA has announced in its recent ‘Portfolio letter for SIPP Operators’ that it expects more failures to come over the next 12 months. A worrying sign for the SIPP industry.
One of the main causes leading to firm failure can often be consumer complaints made to the Financial Ombudsman Service, and the financial redress firms are required to pay as a result. We have also seen insurance market reacting to the additional demands placed on SIPP operators.
Now more than ever there seems to be an even greater need for firms to ensure standards of conduct are high, including ensuring appropriate systems and controls, and operational and financial resilience are in place – as well as preparing for the additional requirements that the Consumer Duty will bring.
The FCA expects its portfolio firms to hold sufficient liquid capital and to hold adequate financial resources such that firms increase the chances of putting things right when they go wrong and to minimise harm if it fails and exits the market. Firms are also expected to ensure that their wind down plan is kept up to date. Crucially, the FCA expects to be notified immediately if a firm concludes that it is not holding adequate financial resources or if the firm is concerned about its ability to meet its debts as they fall due.
Whilst the future environment for SIPP Operators looks set to continue to be challenging, the message from Leonard Curtis to the industry is clear – there is always a solution. Whether its debt advisory, funding, strategic advice or restructuring there is an option and Leonard Curtis can help.
Contact Alex Cadwallader on 0207 535 7000 or Andrew Poxon or Carl Lever on 0161 831 9999 for further information.
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