AMPS: FSA SIPP proposals risk consumer harm

Proposals for SIPP capital requirements based on assets under administration should be scrapped as it could risk consumer harm, the Association of Member Directed Pension Schemes (AMPS) has told the FSA.

In a response submitted to the FSA's capital adequacy paper CP12/13 based on feedback from 82 SIPP providers, AMPS has recommended two alternative formulas for capital requirements and a revised capital surcharge based on the number of illiquid SIPPs. The first model is based on the greater of annual turnover and annual expenditure times the number of illiquid SIPPs. The second is the number of SIPPs versus the number of illiquid SIPPs. The FSA's approach could lead to undesired consequences such as SIPP operators offering low-cost, cash only SIPPs to reduce their percentage of SIPPs ...