Talbot & Muir’s Ms Trott adds, “There will still be some small or unprepared providers who will be looking to exit the market before September 2016. For those that do decide to stay, they have no option but to meet the requirements and clients should find this of some comfort. It won’t, however, stop companies from failing but should prevent clients being left high and dry should the worst happen because there should be sufficient capital for a sensible wind-up or takeover.”
Elaine Turtle, director of technical service at DP Pensions and Amps (Association of Member-directed Pension Schemes) committee member, believes most providers (large or small) will have decided whether they are staying in the market or are going to sell or consolidate. “If staying, most have decided based on the indications from the FCA what investments they are going to allow and then, based on that, they know what funds they need and have that in place. It is annoying that those who are not affected by these new rules seem to be the ones with the most to say in regards to them.”
Sticking point
Property has long been the biggest sticking point with providers. There is no doubt the debate will continue beyond September 2016. Many providers have suggested that property is too illiquid to be considered a standard asset, and that the regulatory completion time of 30 days is not enough for a property purchase to go through.
However, Chris Smeaton, director of commercial and strategy at James Hay, says commercial property should not be viewed as an esoteric investment, nor should it form part of the risk calculations for capital adequacy. “Although complex to administer, commercial property has been the backbone of the Sipp industry since inception and has caused little concern over the years. If one Sipp provider goes out of business, it simply comes down to the cost of transferring it from one arrangement to another and that is not particularly costly.”
Keeping with standard assets, Table 4 looks into which assets are not allowed. Previously, the Table showed which assets are allowed, but it should be assumed that all providers will accept standard investments, so this year we asked which are not allowed within a scheme. Further information on the plan’s bank accounts, providers and rates can be found in Table C.
The Table shows that not many assets are rejected, but physical gold bullion is not accepted by the majority of providers. It also shows which providers do not accept UK commercial property as an asset within schemes. This year, we asked whether providers would continue to accept non-standard investments after 1 September 2016. While the majority said yes, a third of respondents are either not accepting or did not disclose whether they will or not.
