The Financial Services Authority should clearly state what action it intends to take if companies offering self-invested personal pensions continue to operate without approval after 6 April.
Hornbuckle Mitchell, which provides administration services for sipps and small self-administered schemes (Ssas), warns firms who leave it too late to register with the FSA could be jeopardising the pensions of thousands of customers.
From 6 April, the FSA takes over the regulation of personal pension schemes, including Sipps, but Hornbuckle Mitchell says the FSA is known to have been concerned since October about the lower than expected levels of applications it has received.
The firm suggests as many as 40 out of 157 companies are either leaving it to the last minute to register, as the deadline closes on 22 March, or they have decided not to seek approval but have yet to tell their clients.
Neil Marsh, managing director of Hornbuckle Mitchell, says: “Regulation is supposed to increase confidence and professionalism in the industry so it would be a disaster if the new era begins with thousands of Sipp clients looking to help from a watchdog that saw the problem coming but failed to formulate a plan to deal with it.”
As a result, Hornbuckle Mitchell is calling on the FSA to clearly state what action it intends to take against any Sipp company which continues operating without approval after the start of regulation.
Marsh points out it is looking increasingly likely that the FSA will have to deal with at least some companies who have failed to submit their applications in time.
And even if it is only a few companies he warns “collectively they are likely to administer thousands of Sipps which means an equal number of clients left in legal limbo, potentially unable to contribute, take benefits or complete transactions”.
Hornbuckle Mitchell, which has already received its FSA approval, says it intends to waive its £300 initial set-up fee for those clients who want to transfer over from Sipp companies which have failed to gain approval.
Marsh adds: “In the interests of the clients, the FSA needs to be clear which firms have not sought approval. We have also asked how it intends to deal with companies that try to continue without approval and are also keen to hear how it intends to tell those clients trapped in this legal limbo what their next move should be.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
Achievements, charity work and other happy snippets
'A win for advisers'
Unconstrained multi-asset fund managed by Talib Sheikh
Who made the cut?
Transferring out of DB scheme