Capital requirements for SIPP providers do nothing to mitigate risk, the founder of consultancy MoretoSipps has claimed.
John Moret, known as Mr SIPP, said any regulatory focus on SIPPs should not go too far on capital requirements as he believes it could cause many firms to fail.
He said the capital requirements “take no account of the range of investments held or of the level of scrutiny applied to such investments. It also does not really take into account the legal structure of the SIPP business.”
Mr Moret claimed the FSA may consider introducing higher capital requirements on SIPPs as it looks to put pressure on those “sailing close to the wind” through the holdings they allow, such as unregulated collective investment schemes.
He also said he would be uncomfortable with any clampdown on SIPPs that would push people into small self administered schemes.
He said: “I am very uncomfortable with any suggestion of regulatory arbitrage. That can hardly be in the best interests of the investors. However for businesses that run combined SSAS and SIPP portfolios, the stripping out of SSAS costs and income could reduce the regulatory overhead.”
Stephen Robinson, managing director of Bristol-based Clarke Robinson, said: “I have had clients coming to me with interesting investment propositions in their SIPPs. Promoters of UCIS schemes have different rules on promotions.
“There does need to be more control in this area. Whether increasing the capital adequacy will solve the problem is another thing.