An in-depth investigation by the regulator came to a head last year with a list of long-awaited changes to the SIPP market, including new capital requirement rules.

In response, a number of operators shut up shop altogether while others tightened their investment criteria, taking actions such as banning ‘esoteric’ investments – for example, commercial property and unregulated collective investment schemes.

As a result, many clients had their pension pots transferred from one provider to another or were forced to move because their operator no longer accepted a certain type of investment. This meant the investor incurred fees for setting up a new SIPP plus hefty exit charges from the outgoing operator in many cases.

While consolidation appears to have slowed down, it is not over yet, according to industry experts.

Some operators have admitted they will not be able to meet the capital adequacy rules which come into force on 1 September 2016, meaning they will have to close and transfer their books of business, forcing clients to cover the costs of moving their assets.

“Consolidation could accelerate rapidly over the next year or two,” said Murray Smith, director of SIPP provider Mattioli Woods.

If a SIPP provider got into difficulty, it is likely that the actual investments would be protected in a trust company, but concerns remain regarding the administration of these assets.

Claire Trott, head of pensions technical at SIPP provider Talbot & Muir, said: “It could mean delays in accessing income, tax-free cash or even divesting assets. This could mean you are trapped in an asset you want to sell or can’t buy an asset at a time you would have chosen. This could lead to  financial losses.”

As providers reduce the flexibility of their propositions, investors could also find themselves landed with a new firm that cannot meet their needs.

“Less liquid assets such as property drive a greater requirement for capital so you could end up with providers offering less choice,” said Smith.

“You could also see some price rises in the short-term for the consumer. There will be instances where the cost of setting up a SIPP won’t cover the capital needed to take on the client. How else will providers be able to cover the new capital requirements than to increase prices?”

The message to investors is to ask questions now.

“Individuals should be aware of the new capital adequacy rules and make enquiries to satisfy themselves that their provider will meet the new benchmarks and they will therefore be unaffected,” said Martin Tilley of SIPP operator Dentons.

Further reading: Six questions to ask if your SIPP provider is bought