I would not describe it as riveting viewing, but it had its moments. It is probably not an exaggeration to say that the outcome of this appeal will have a big impact on the future shape of the SIPP market and might even spill over and influence other types of “execution-only” business.
I am not going to comment on the detail of the appeal nor predict the likely outcome. However, should the appeal be upheld it could well lead to the demise of several more SIPP providers and lead to significant further financial pressure on many other SIPP providers. The floodgates for claims and Claims Management Companies will really open.
On the other hand if the appeal is rejected it will cause the FCA severe embarrassment. As they have done in several other SIPP legal cases including the original hearing in this case the FCA chose to intervene and made representations on various regulatory issues including giving their interpretation of some complex aspects of the Financial Services and Markets Act 2000 and the related Regulated Activities Order. Opinions were also given on certain parts of the Perimeter Guidance and COBs.
Also it would seem that FOS are taking the view that the judge’s original decision in this case is only of passing relevance in reaching determinations on SIPP related claims. That may have to change if the appeal fails and it may even have an effect on determinations that have already been made. Similarly future and possibly past FSCS claims could also be affected.
I have been reflecting on how we have managed to reach such an unsatisfactory state of affairs and I believe that it dates back to the changes introduced by pensions simplification (A-Day) in April 2006 and the related regulatory changes for personal pensions and SIPPs introduced one year later.
Whilst well intentioned, the changes to the permitted investment regime which introduced investment freedom and the concept of “taxable” property opened the door to abuse.
That door could have been firmly shut if regulation of SIPP operators had been introduced concurrently and sensibly. Instead it was delayed by a year and significantly the regulatory framework which was adopted was ill conceived. Shoehorning SIPP regulation into a regime designed for contract based personal pension products was never going to work.
Of course the role of unregulated introducers in contributing to the many legacy issues that now plague the world of SIPPs should not be diminished.
The inappropriate actions of a small number of regulated advisers and of a few naïve or complicit / misguided SIPP operators should not be overlooked. However having listened to the pleadings and arguments in the court room I remain convinced that the regulatory regime for SIPPs is not – and has never been – fit for purpose.
Hopefully, whatever the outcome of the Appeal, the complexities and inadequacies of the current regulatory regime for SIPPs will have been noted by the Treasury and FCA. I would like to think that this might be the trigger for the long overdue SIPP regulatory reform that I have advocated through these and other columns on many occasions.
John Moret is principal of MoretoSIPPs consultancy and one of the UK's most experienced SIPPs experts, commentators and speakers. He has worked for Suffolk Life and several other SIPPs providers. He is chair of advisory business Intelligent Pensions and CX insight business Investor in Customers.