Unlike older back-office systems, modern set-ups can handle multiple variables at once, quickly and accurately producing MI that will meet the FCA’s concerns about quality of business, for instance. You should share these concerns. It is no use introducing squeaky-clean business if the operator is gradually, perhaps unwittingly, building a hornet’s nest of issues from those less scrupulous.
A final thought. The capital adequacy proposals were intended to ensure all operators had sufficient reserves “to facilitate an orderly wind-down”. A far more important factor in that, including the potential to find a bidder, may be systems. Ironically, a higher capital adequacy may leave some with fewer funds to invest in systems.
Andy Leggett is head of business development for Sipps of Barnett Waddingham
BACKGROUND
Systems are the very infrastructure of a Sipp operator and all it does: they are central to the operation and therefore your due diligence. Like the Sipp industry itself, systems have evolved during a long period (since 1989 for Sipps). Older systems tend to be standalone without integration, which means they do not join up processes seamlessly. Newer systems are process oriented and so less manual intervention is required. There is often a significant cost attached to moving a client’s Sipp administration from an old system to a newer one (for what the operator may perceive as little benefit to them) and so operators may run more than one system.
Key points
■ The FCA and its predecessor have taken an increasingly keen interest in Sipps’ back office during the past two and a half years.
■ There is a trade-off between automation and flexibility that goes right to the heart of an operator’s proposition.
■ There is a ream of regulatory reporting that has quietly gone on for years – product sales data to the FCA, event reports and accounting for tax to HMRC.
