Published on Friday, the FCA’s quarterly consultation paper proposes tweaking the regulatory capital framework for operators of self-invested personal pensions (SIPPs), clarifying parts of the policy and reducing compliance costs for firms.
The capital adequacy framework is designed to protect consumers in the event of a SIPP operator leaving the market.
The new rules mean that firms need to calculate their assets under administration (AUA) on a quarterly basis using valuations that are up to 12 months old.
“For some firms, obtaining accurate quarterly valuations of the AUA in a timely manner can be difficult, largely due to systems and reliance on third parties,” said the FCA.
“For some firms, obtaining accurate quarterly valuations of the AUA in a timely manner can be difficult"
“These changes do not amend the fundamental framework of this policy but rather make focused technical changes.”
If a firm sees an increase in its AUA, then it has six months before it must apply for a higher constant in order to calculate its initial capital requirement.
Given that there is an additional surcharge for firms administering non-standard assets, the FCA also said it was planning to broaden the range of securities on the standard asset list to include all securities trading on a regulated stock market.
Head of communications at Hargreaves Lansdown, Danny Cox, said he supports the framework.
“Maintaining consumer confidence in SIPPs as a product is essential for the market, and ensuring providers have sufficient capital adequacy is a key element,” he said.
