SIPPS: Has the FSA taken the right approach?

The FSA has released its anticipated consultation paper on capital adequacy. Industry has long debated what these requirements would involve. At an AMPS conference earlier in the year, an FSA spokesman revealed a risk based approach was likely to be adopted. However, the new proposals are slightly broader. Currently, SIPP operators are required to hold reserves of either £5,000, six weeks of expenditure or 13 weeks of expenditure if they hold client money. The FSA's paper identified "two significant weaknesses" in this approach. Providers' expenditure is not necessarily aligned to the...