In contacting the Liberal Democrats press office this week to get their response to the Treasury and Gordon Brown's defence of the abolition of tax relief on dividends, they replied "there's not much more we can really add to what we've already said".
As a result I’m going to follow their lead and ignore the obvious pensions topic, and turn my attention instead to the wonders of Sipp regulation.
Yes I can tell I have your attention now, but let’s see how long I can keep it!
The FSA finally takes over regulation of personal pensions including Sipps on 6 April – ironically Good Friday – and despite all the hype about how this will change the market for ever, I’m not too sure people are focusing on the right areas of change.
In truth, I'm not convinced of how much of a difference it will actually make – at least not immediately and not to the actual products.
Potentially the biggest issue to deal with will be those firms who haven’t bothered, or wanted, to get authorised, but as the majority of these slowcoach Sipp providers seem to have got their act together - in a rush of applications to the FSA before the deadline last month – even this favourite of the doomsday prophets seems to be less certain.
Of course, there are still potential issues, as many in the industry have voiced concerns about the new capital adequacy requirements – equal to 13 weeks of operating profit – which could provide to heavy a burden for some of the smaller providers.
In addition, James Hay has raised the possibility Sipp providers may have to wait for the month-long cancellation period to end before it can start investing Sipp funds, as the new rules require providers to reimburse investors the full amount they have invested if they cancel within four weeks.
As a result, if the pension is fully invested, this would make the provider liable for any losses if, for example, the stockmarket fell, although the company suggests getting investors to actively ask for funds to be invested, which is known as a waiver, would avoid this potential problem.
But to be honest the regulation of the actual mechanics of Sipps – authorised investments, the solvency requirements, and the cancellation period – are not things which will immediately start causing problems, as like A-Day the real issues will only start appearing once the regulation beds down and more guidance is issued.
After all, it’s not really pensions regulation until you have ‘guidance’ amounting to the size of the Encyclopaedia Britannica!
Instead, although the investment part is important, I believe the FSA is going to put more of its focus onto the advice and promotions attached to Sipps, a preview of which was published last week in its latest newsletter.
The four-page document warned advisers about the suitability of advice leading to a transfer from a personal or occupational pension to a Sipp, and pointed out it is already “monitoring closely” the provision of Sipp advice adding if necessary it will consider “carrying out focused thematic work”.
Now there’s a scary thought!
The FSA has already pointed out advisers should make sure they have the appropriate permission to advise on Sipps, and with the findings of the retail distribution review scheduled for June it gives the FSA two months to start finding any faults which need to be improved.
Now the implementation date for Treating Customers Fairly (TCF) has passed, advisers are under even more pressure to justify – and prove - the advice they give and the products they recommend are right for the clients.
So while Sipp regulation may have a similar impact to A-Day in the actual product and provider aspect of the industry, the real challenge it could provide to advisers is the possibility of changing the way they run their business.
The question is, is it a challenge the industry is ready for?
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
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards