It should come as little surprise that the UK financial watchdog has turned its gaze to international self-invested personal pension schemes after its scrutiny of Qrops and defined benefit pension transfers.
According to a letter seen by International Adviser, firms that previously indicated to the financial watchdog that they operate a Sipp targeted at non-UK residents are being asked for more information.
And they are being asked for a lot of information.
It follows the FCA issuing a statement on its website expressing concerns that, where an international Sipp contains an offshore bond, consumers “may be exposed to high and/or unnecessary charges”.
Information demand
On 2 December, the FCA sent a ‘portfolio letter’ to firms asking them, among other things, to benchmark how they operate against the regulator’s expectations when it comes to international Sipps.
The deadline for this is 18 December.
The latest letter, however, is seeking the following:
- A summary of information about the firm’s international Sipps business;
- Details of offshore investment bonds accepted within the Sipps since 1 January 2019;
- The underlying assets held within those offshore bonds; and,
- Complaints related to international Sipps.
“The request also contains sections for intermediary data,” the letter added.
The deadline to respond to the second letter is 8 January 2021.
Looking at the minutiae
Firms are being asked to provide a whole host of data about international Sipps, including:
- Asset under administration trend– new business accepted each calendar year since 2016;
- Current total AuA;
- Which offshore life company holds the bonds;
- Number of offshore bond early surrender requests processed since 2017;
- Number of DB pension transfers since 2017 that are now held in an offshore bond;
- Value of DB pension transfers since 2017 that now hold assets through an offshore bond;
- Number of DB pension switches since 2017 that now hold assets through an offshore bond;
- Value of pension switches since 2017 that now hold assets through an offshore bond;
- Charging schedule for international Sipp;
- Offshore bond charging schedules;
- List of aggregate ongoing charges.
Companies are also being asked to provide the regulator with example documents.
Some firms will struggle
In a sense, it was inevitable that the Financial Conduct Authority would work its way round to the international Sipp market.
The short timeframe that firms have been given to comply with the second letter clearly indicates that the regulator expects businesses to have this sort of data at their fingertips.
But not everyone is convinced that is the case.
Speaking to International Adviser, one source was sceptical that all firms will be able to provide the information the regulator is asking for.
