SIPPs attract the eagle eye of the FSA as business booms
The Financial Services Authority (FSA) has started to regulate self-invested personal pensions (SIPPs) amidst concerns that the high commission payments available to financial advisers are “distorting” the market.
Even up until a few years ago SIPPs were mainly sold by specialist companies, but in recent years the market has boomed and a lot of new providers have come into the arena as people compare pensions and reckon they can maximise their returns with the product.
Many of the new entrants are large insurance companies that pay big commissions for sales of their pension products.
As a result, sales of SIPPs have mushroomed, although many observers reckon that much of the cash flowing into them comes from existing pension schemes and that advisers are merely “churning” money from pension business to cash in on the commission available.
The FSA has already given the industry notice that it has its eye on the SIPPs market. It recently warned advisers that a “switch into SIPPs should be suitable for the customer to whom it is recommended, reflecting the customer’s needs, priorities and circumstances, and not influenced by commission payments”.
Customers are recommended to check the level of commission they are charged and to compare pensions and get best pension advice whenever they make a decision to restructure their portfolio.