It also illustrates whether a provider allows certain types of property. The Table also looks at basic charges for holding commercial property and whether or not it insists on its own solicitor, property manager or block insurance.
Across all the survey respondents, there is a total of 22,072 properties within Sipps, although not every provider disclosed the type of property. James Hay’s Modular iSipp holds the highest number of properties, 4,379, however it does not disclose the type of property held. It can be assumed there are no overseas properties as this is the only type of property not allowed within its scheme. Rowanmoor follows with 3,209 and Hornbuckle with 3,000 properties.
The average property value across all respondents that allow commercial property sits at £269,790, with the highest from Carey Pensions (£722,462) and the lowest from Rowanmoor (£52,961), although many did not disclose the average. Table B details charges associated with commercial property for each firm.
By this time next year, Sipp providers will have undergone the regulator’s changes to Sipp capital adequacy requirements. Last August, the FCA announced providers would need to hold at least £20,000 in reserve by September 2016. These requirements do not impact life companies as they have separate requirements. More can be seen in Box 1.
It should also be kept in mind that Table 3 only represents an example of capital adequacy rather than exact figures, as it is not yet a firm requirement. So companies must not be disregarded yet as, come September, it will be a regulatory necessity. One reason some operators might not meet the requirements is that it is not a current regulatory requirement to keep money aside, so there is no need to.
Cash levels
Robert Graves, head of pensions technical services at Rowanmoor, says the requirements will have a greater impact on smaller providers, more so for those offering a traditional Sipp service proposition with a wide investment choice including non-standard investments.
“This is because the capital adequacy rules require the Sipp operator to hold a higher level of cash where non-standard assets are held in clients’ Sipp portfolios.”
“Where existing Sipp firms already have exposure to a high level of non-standard investments, continuing to allow further investment into non-standard investments will not be prohibitive, whereas those Sipp firms with little or no exposure to non-standard investments will see a marked increase in the required amount of capital adequacy. This could be prohibitive and polarise the Sipp market – between Sipp operators who will only accept standard investments, and those which continue to offer the traditional full Sipp investment opportunities.”
