The Financial Conduct Authority (FCA) has delayed the publication of new capital adequacy rules, which will affect SIPP providers and investors alike.
SIPP providers must retain certain levels of capital within their business, but there has been concern for some time that the current requirements are insufficient. Late last year, the Financial Services Authority (FSA) proposed large increases to the amount of capital
SIPP providers will need to retain and launched a consultation process.
New cap ad requirements for SIPP providers
If implemented, the new proposals would link the amount of capital required by SIPP providers, to the volume of assets held by their members and also the type of investments; with providers who have larger exposure to ‘non-standard’ assets required to hold greater levels of capital.
The proposals came in for criticism from SIPP providers and investors alike; with many concerned the regulator had included mainstream investments, such as commercial property and fixed term savings accounts, in the ‘non-standard’ category. There was also concern that such a large increase in the capital needed, would adversely affect smaller providers, leading to a reduced number of SIPP providers, less innovation and higher fees for investors.
The FCA was originally set to publish the final rules in April 2013, a deadline subsequently pushed back to September and now moved again to the end of the year.
A spokesman for the regulator said: “We continue to consider the many detailed responses we received to CP 12/33, and it remains our intention to publish a Policy Statement before the end of 2013.”
“We recognise that there are a range of views and we will take all of these into account so that we can arrive at a fair solution that better protects investors, while not imposing disproportionate costs on operators.”
The reaction from SIPP providers was mixed. Some have accused the FCA of causing unnecessary confusion and delay, whilst others welcomed the news, hopeful it was a sign the regulator was listening to their concerns.
Speaking on behalf of the Association of Member-directed Pensions, Andrew Roberts, said: “It’s right that the FCA spend enough time to make sure that the new rules are fit for purpose. We do not want a set of rules that need to be revisited after they come into force. The industry is already suffering as a result of the uncertainty and so I do hope that a statement is issued soon.”
Roberts continued: “My view is that the policy statement could have been issued within six months of the consultation period closing had there been more active engagement with the industry both before and after the consultation paper was issued, as it is a tough issue to resolve without external assistance.” (Source: Citywire)