Wednesday, September 07, 2005

Treasury considers Sipps regulation

The Treasury is releasing a consultation paper at the end of September examining whether there is further need to regulate the pensions industry and which could see the FSA regulating self-invested personal pensions.

In particular, the consultation document will be seeking views on eligibility rules for establishing a tax privilege scheme and opening the market up to more companies.

Sue Monk, a spokeswoman for the Treasury, says the consultation paper will be looking at the entire pensions industry and whether there is a need for further regulation.

One possible option being offered in the consultation paper is a new Financial Services Authority (FSA) regulated activity of establishing and operating a pension scheme, which would bring Sipps and occupational pensions under FSA regulation.

Francis Moore, managing director of European Pensions Management and secretary of the Sipp Provider Group (SPG), says his understanding is there are two strands to the Treasury consultation which has yet to ben released.

Moore says: “It is our current understanding that the Treasury intends to consult on widening the range of firms authorised to establish personal pension schemes with those authorised firms able to add a new permitted activity from April 2006.

“From April 2007, we understand the Treasury will be requiring all those who operate personal pension schemes to be authorised as part of general pensions schemes regulation. However, we are at an early stage and detail will be fleshed out in the forthcoming Treasury consultation and in our discussions with the FSA and HM Revenue & Customs.�

Andy Taylor, individual pensions marketing manager at Scottish Life, says: “Scottish Life would welcome the regulation of sipps. Historically, sipps have been a niche product sold to high-net-worth individuals who have had access to investment advice. Post A-Day, we see sipps as a more mainstream or mass market product. We therefore see the regulation of sipps as being a sensible step which will bring them onto a level playing field with other mass market products.�

But Moore adds: “I would not be in favour of a situation where we get partial regulation because a lot of sipps are already regulated through what they invest in and the fact IFAs are already regulated to give investment advice.

“The other thing we want to avoid is segmented regulation whereby sipps are regulated but not the rest of the pensions industry because effectively this will lead to scheme that are constructed in a slightly different way but will on the whole look and feel exactly like a Sipp.�

Last month, the SPG called for a level-playing field in relation to regulation of Registered Pension Schemes post A Day. Most investments of Sipps, it says, are held with regulated entities such as banks, investment managers, and stockbrokers already the exception being commercial property

Info from IFAonline


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