The Financial Services Authority's (FSA) proposed reforms to rules on self-invested personal pensions (SIPPs) do not go far enough to tackle malpractice, according to John Moret, director of MoreToSIPPs.
Moret said the arrests of and investigations into the directors of HD Administrators (HDA) demonstrate the need for an "urgent overhaul" of all SIPP regulation.
In March, the FSA re-opened a consultation on proposals which would see all SIPPs subject to the same strict disclosure rules regardless of what kind of investments they hold.
Originally, the regulator proposed some SIPPs would be excluded from the requirements if they held certain investments such as commercial property, shares or commodities.
However, Moret said the FSA's proposals do not go far enough.
"The appalling revelations about HD coupled with rumoured problems at other small SIPP firms holding overseas property and other esoteric investments have convinced me that it is time there was a thorough review of SIPP regulation and related HMRC rules," said Moret.
He said SIPP regulations were introduced in 2007 without proper consideration and only added to the risks brought about by the relaxation of tax rules on A-Day in 2006.
Moret said the new regime created a "toxic mix" of liability brought about by the new role of scheme operators within SIPP firms and legislation allowing total flexibility over investments with only tax charges as deterrents.
He dismissed the FSA's proposals on increased disclosure and capital adequacy requirements as insufficient.
"This is simply a case of tampering at the fringes when what is needed is an urgent overhaul of the whole regulatory regime," said Moret.
"Prior to 2006, when there was an agreed list of permissible investments and SIPPs could only be provided by financial companies of substance, the types of problems now being encountered did not exist.
"It must be time for a rethink before the whole SIPP industry is tarnished."
Due to leave 31 May
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