In his speech at the Henry Stewart Self Invested Personal Pensions (SIPP) Master Class on ‘Managing Risk While Still Making Money Out of SIPP Operations’, Duncan Howorth, managing director, JLT, emphasized how challenging it currently is for some SIPP providers.
“SIPP providers are increasingly having to operate like Life Assurance Companies, with financial and operational controls, product suitability, ‘Treating Customers Fairly’ all very real and current issues requiring investment, resource and time. SIPPS are now just another form of personal pension and so are regulated as such,” says Howorth.
He explains that the evolution of SIPPs has moved market share and advantage to mainstream providers with Life Companies and larger independent SIPP providers better positioned to deal with challenges of regulation.
“SIPPs started with a number of smaller independent providers, but as the product has become more mainstream, Life Companies and SIPP platform operators have seen increased market share,” adds Howorth.
Whilst stressing that significant shareholder value is being created in the SIPP market, Howorth predicts a consolidation in smaller providers as a consequence of rising costs and at best static pricing, “Unfortunately it is the smaller, bespoke providers who are most at risk”.