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Further consolidation in SIPP market expected

3 May 2018

Financial advisers believe consolidation in the SIPP market will continue, according to a new survey by Dentons Pension Management.

The survey of 55 advisers attending Denton’s Annual Seminar in March, found 85% believe the number of SIPP operators will reduce, with potentially a further five or more being consolidated. However, the results showed it wasn’t “a significant concern” to advisers.

Martin Tilley, director of technical services, Dentons, said: “The results of the survey show that there is a high expectation the SIPP market will change dramatically over the year, with the pending court case results having a huge impact on the whole industry. It is clear that not only are regulators cracking down on the use of non-regulated intermediaries, it is also being widely criticised by the industry.”

As part of the attendee survey, advisers were also asked in which situations they believe SIPP providers should take responsibility for investment choices. Over half (54%) said when investments were introduced through a non-regulated intermediary. A further 18% said when disclaimers were issued to the client by the SIPP provider where the investment was deemed ‘high risk”, while 15% cited when investments deemed as “high risk” were entered into prior to the last FCA thematic review in 2013. For 13% of advisers, responsibility should be taken when investments were introduced through a regulated intermediary.

Tilley said that in order to take more responsibility for the investments being made by clients, SIPP providers would need to invest in more resources, which will in turn lead to increased costs that not all providers will be able to absorb.

He added that it was possible there would be more consolidation in the market or that companies for which a SIPP offering was not core to their business, would exit the market.

With the ongoing scrutiny of SSAS and scammers targeting the market, advisers were also asked whether they believe HMRC’s ‘check and register process’ and their ability to deregister SSASs with dormant employers was a sufficient control to prevent the use of SSASs for scam investments – an overwhelming 85% of the advisers surveyed said no.

David Fox, director of sales and marketing, Dentons, said: “With a number of regulatory changes being put in place over the last 12 months causing added pressures, there has been a level of uncertainty for a number of SIPP operators. We do not believe this is likely to change in the near future and we will continue to face challenges throughout 2018.”

Martin Tilley will be presenting at selected venues as part of the Professional Paraplanner Technical Insight Seminars 2018.

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