Pension providers have expressed concern about the effectiveness of recent FSA proposals to make SIPPs more transparent.
The paper proposes changes to ensure SIPP providers are no longer exempt from producing key feature illustrations (KFIs), effect of charges tables or reduction in yield (RIY) information for clients.
It will also be asking the industry if SIPP operators should have to disclose any interest made and retained by them from investors' cash accounts.
However, SIPP experts have questioned the broad-brush approach of the paper and whether the proposals will help protect consumers.
John Moret, director, More To SIPPs (pictured), says: "The current SIPP regulatory regime is not fit for purpose. In shoehorning SIPPs into a regulatory regime designed for stakeholder and personal pension schemes the FSA created a Pandora's Box.
"They have not been helped by the lack of a unified industry split between a handful of insured SIPP operators, a few platform SIPP operators and a plethora of mainly small non-insured SIPP operators."
Moret says more effective reform would be to separate SIPPs into categories such as ‘artificial' and ‘true'. The former would be regulated as packaged products and the latter as platforms.
He adds the issue of interest retained on cash accounts by providers is a ‘red herring' and the underlying rate of interest the investor receives and their ability to choose a different bank is more important.
Richard Mattison, business development director at James Hay, says the paper is a missed opportunity: "Some time ago the FSA asked providers to make illustrations more accurately reflect the expected investment performance of the underlying asset classes but allowed the provider to choose what projection rates they used.
"This means providers use different rates of growth for the same asset classes so proper product comparison is not possible. The FSA should specify what projections providers should use."
Steve Hart, business development director, Curtis Banks adds: "Our operating systems are nimble enough to cope but we fear a number of SIPP providers may not have adequate systems in place to cope and such requirements will add to the pressure they are facing."
However, other SIPP operators have been more welcoming. David Fox, sales and marketing director at Dentons Pension Management, says: "Any system that improves the transparency of how the provider is remunerated can only be of help to advisers and clients alike."
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