AJ Bell has changed the terms and conditions (T&Cs) of its SIPP products allowing it to pass on the costs of FSCS and FSA levies to investors in the future.
Previously AJ Bell had absorbed the cost of regulatory levies, but the provider said it must make the change to keep the cost of its products down.
The revised T&Cs, dated 12 April 2011, now read: "We reserve the right to make an additional charge if we are required to pay a levy, or interim levy, under the FSCS or the FSA."
AJ Bell said the cost of levies would be split proportionately across all SIPP cash accounts it holds and it would give investors 30 days' notice of the charge. The provider also said it would pass on any FSCS refunds on the same basis.
Its decision has been taken after advisers and providers were hit with a £326m FSCS interim levy relating to the failure of Keydata and similar firms.
Billy Mackay, marketing director at AJ Bell (pictured), said: "SIPP providers got charged a substantial FSCS levy this year, and whilst the size of this year's levy was substantial, A J Bell decided to entirely absorb it as a cost to the business.
"As a business our focus has always been on keeping charges low where at all possible by the use of technology. Unpredictable levies of this size and nature introduce a new challenge for all firms.
"This could result in providers having to consider increasing charges over the longer term to allow for the possibility of significant levies being made.
"We would rather avoid this type of pricing strategy. The change will give us the right to introduce a one off charge if a substantial levy of this nature is made in the future."
The move comes after a spat between rivals James Hay Partnership and Rowanmoor over whether SIPP providers should pass on levies to investors.
In February, James Hay wrote directly to all its SIPP clients informing them it reserved the right to pass on FSCS levies. The levy for IFG Group, James Hay's parent company, was around £940,000.
Rival Rowanmoor then announced it would not pass on its levy to investors, but refused to confirm the size of its levy.
James Hay responded by saying Rowanmoor's levy would have been significantly smaller and so easier to absorb.
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