“This will be set out in an initial view, at which point both the consumer and the business have the opportunity to submit further evidence and have the case re-assessed by an ombudsman for a final decision.
“We have published a number of decisions relating to Sipp cases which set these considerations out in detail, and explain why they are relevant to deciding what is fair and reasonable in the circumstances of the case.”
The guidance
Four years ago, Moret said he circulated a policy paper to the Treasury, FCA, Fos and others suggesting that it was time to clarify the role and responsibilities of a Sipp operator.
“I repeat that call particularly in the light of the new consumer duty requirements which will impact all non-workplace pension providers along with all advisers large and small,” he said.
The guidance Moret proposed would cover:
- What is an “acceptable” or “appropriate” investment?
- Clarify precisely what is required of a Sipp operator with regard to due diligence of investments – both standard and non-standard – and of introducers.
- Confirm the extent to which the requirements apply where the Sipp was accepted on an execution-only basis and what other requirements, if any, exist in these circumstances.
However, an FCA spokesperson said: “We have set out our expectations of Sipp operators through several FCA publications, including final guidance in 2013.
“Under the new consumer duty, we will have a further basis on which to intervene where we see poor practices. We will hold firms, including senior managers and boards, to account against this higher, clearer set of expectations.”
Sipp operators are subject to the FCA handbook like all authorised firms and the regulator expects them to meet regulatory standards, which includes conducting due diligence over the introducers they accept business from and the assets they allow into their pension schemes.
In 2013, the FCA published guidance for Sipp operators relating to its due diligence expectations particularly in relation to non-standard investments.
Since then, it has published Dear CEO letters in 2014 and 2018 which reiterated this, as well as a letter in 2020 which referenced the guidance and built on the wider expectations for Sipp operators.
FTAdviser understands that since 2015, the FCA carried out regular data collection exercises to understand the assets being accepted by Sipp operators and, where necessary, intervened to prevent future harm building up.
In 2016, it introduced prudential rules to further strengthen requirements on Sipp providers, which require them to hold extra capital if they have Sipps that invest in non-standard assets.
“Whilst this guidance might not help resolve historic claims it would be a useful indicator of what is 'fair and reasonable,” Moret said.
“It would also provide much needed comfort for providers and advisers against the potential for future claims and would limit the scope for claims management companies to create unjustified consumer expectations and, as a result, increased overhead and administration costs for providers and more regulatory costs for advisers.”
Moret added that in recent months, the FCA have come in for “considerable criticism for dilatory action” on a range of failed investments and scams.
