IFAs must question whether products are real SIPPs, says pension services provider Premier Pension Services (PPS).
The provider's waning comes on the back of concerns expressed by the FSA on widespread SIPP sales which have risen to 250,000 since A-Day.
The regulator suggested IFAs select the product based on its ability to offer a wide range of funds, rather than whether it is truly suitable for clients.
However, Nigel Manley, head of self-invested pensions at Premier Pension Services, does not blame IFAs.
He says: “It seems almost every provider in the market place is turning its pension product into a SIPP because it is the fashionable thing to do.
"You have to ask yourself the question, how many of those products are actually true SIPPs and how many policyholders will ever extend their fund choice beyond a handful of managed or tracker funds.
"The FSA have every right to be concerned because undoubtedly there will be cases where a SIPP is patently not suitable for a client".
PPS says the FSA faces a situation where it will try to apply the same rules to all products in its attempt to regulate the SIPP wrapper.
Manley says: “The FSA will have to try and pick its way through a veritable minefield of product variations, all contained under the same banner. I almost feel sorry for them. Almost.”
He says product providers must share part of the blame as he says they re-brand product SIPPs to inflate sales.
He says: “It is great PR, but potentially does a lot of damage. We certainly don’t want to see SIPPs as the next big misselling scandal. We potentially have a heady combination of policyholders developing a taste for managing their pension fund assets online without suitable advice.”
In August James Hay accused providers of using deferred SIPPs to artificially bolester sales.
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