New proposals will require firms to disclose what happens to interest and what commission is received on SIPP accounts.
SIPP providers will have to disclose any commission they receive or bank interest earned on scheme members funds, under new rules proposed by the Financial Services Authority (FSA).
In its quarterly retail distribution review (RDR) consultation paper the FSA proposed SIPPs should no longer benefit for disclosure exemptions which currently mean they do not have to disclose the extent to which they receive bank interest or other commissions.
The FSA said: “In our view, unless equivalent disclosure rules apply to all schemes, no matter how invested, consumers and advisers will not have the information they need to understand the costs and benefits applying to competing schemes and to identify an appropriate and cost-effective personal pension choice.
“Although many firms provide this disclosure anyway, some firms may find it a challenge to provide meaningful illustrations for certain assets and will need to apply more thought in making and justifying assumptions.”
The regulator also wants all personal pension schemes to produce key features illustrations, effect of charges and reduction in yield information.
It says: “To help consumers or their advisers compare alternative pension products and identify the most appropriate pension option, we think our rules should require that comparable information is always made available.
“In order to achieve this, we are proposing that the existing Sipp exemptions are removed from COBS 13 and COBS 14, and the same disclosure rules applied to all personal pension schemes, whether branded as a SIPP or not.
“This approach will be consistent with the approach of the Department of Work and Pensions, which does not distinguish between different types of personal pension scheme and requires statutory money purchase illustrations for all personal pensions, whether branded as a SIPP or not, and regardless of the underlying assets.”
The regulator says the new disclosure rules will require providers to produce 50,000 extra key features illustrations at a cost to the industry of £100,000 a year. It says the new rules will come into force at the end of 2012.