It is also prudent for providers to check that assets have a limited liability and they are comfortable with this liability so as not to put other Sipp investors on their books at risk, she says. “Providers need to be confident that the business on their books is sustainable and liquid enough to pay their fees, so taking on illiquid assets and tying up entire funds will not bode well for the longevity of the provider. They need to cover their fees as well as the advisers.”
Elsewhere, Alastair Conway, chief executive of James Hay Partnership, says, “There are clear merits in both sides of the argument for permitted lists. On the one hand, caveat emptor in this day and age appears to be dead and reinstating the use of a permitted list could be a way of mitigating risks for clients, advisers and providers. While on the other hand, it would restrict legitimate investment choices.”
Added responsibility
Mr Conway says, “We have to work with the rules that we currently have and to our mind that means ensuring robust, repeated due diligence is carried out at provider level to ensure investors have access to a wide range of legitimate investments.”
By the time the next survey is published in October this year, the FCA will have hopefully announced its plans for capital adequacy, but for now, providers have to hold tight and wait.
Rowanmoor’s Mr Graves says, “As financial services is never a static environment, regulation will always be subject to ongoing change and development.” This means that a good relationship between the regulator and industry sectors is essential in the coming months.
There has never been a more important time for advisers and providers alike to perform thorough due diligence for new and existing clients. While the responsibility currently lies with the adviser, changes within the industry could mean Sipp operators will be under an even greater spotlight. With changes afoot in the coming months, figures in the next survey could be entirely different.
