The Investing and Saving Alliance (TISA) has today urged the FCA to ensure stronger SIPP protections do not add unnecessary regulatory complexity.
The organisation warned that overlapping regimes for pension scheme money and assets could increase costs for firms without improving consumer outcomes.
In its response to the FCA consultation CP26/20: Adapting our rules for a changing market: self-invested personal pensions, TISA called for firms to have the option to operate under either the existing Client Assets (CASS) regime or the proposed new Pension Scheme Money and Assets (PSM&A) regime, with clear boundaries between the two.
Renny Biggins, head of policy: products & long-term savings at TISA, said: “Requiring firms to operate across two overlapping regimes could add significant cost and operational burden for firms without delivering a corresponding improvement in outcomes for customers.
“The FCA should create a clear route for firms to operate under a single regime, while ensuring CASS and the new PSM&A framework work consistently and complement each other where they interact.”
TISA welcomed the strengthened protections for SIPP customers and improved governance of pension scheme money and assets, as well as the principles underpinning the FCA’s proposed due diligence requirements.
However, it said the due diligence rules themselves must remain proportionate, avoid unnecessary duplication and recognise responsibilities that already exist across the distribution chain.
TISA also called for greater clarity on the practical application of the due diligence requirements, to support their effective implementation while maintaining consumer choice and access to SIPP products.
Mr Biggins added: “While we support the intention behind the due diligence rules to protect SIPP customers, firms should not be required to repeat checks or responsibilities that already sit elsewhere in the regulated distribution chain.
“The final rules need to be clear and proportionate so firms understand exactly what is expected of them. That will help deliver stronger consumer protection without unnecessarily increasing costs or restricting the range of SIPP products available to consumers.”
Meanwhile PIMFA said it broadly supports the FCA's proposals, but it said there are a number of new requirements which it believes require further clarity.
Julia Sage-Bell, senior policy adviser at PIMFA, speaking on behalf of the UK Platform Group (UKPG), said: "The FCA must set out clear expectations of firms and establish how proportionate these checks have to be. This will allow firms to assess what resources they would need to deploy, and determine whether the proposals are realistic. This is particular concerning around legacy arrangements."
She said in their current form, the proposals risk imposing a host of unintended consequences on consumers with legacy assets. In cases where firms have inherited arrangements, through acquisitions, in-specie transfers or historic business models, firms may not have sufficient influence to implement new terms of business or revised contractual obligations.
Ms Sage-Bell said: "While the proposals expect firms to 'take reasonable steps to mitigate harm' where due diligence requirements can’t be met, in many cases firms will be unable to take action due to product or legislative restrictions. In other cases, action will result in consumer detriment through charges or taxation."