The exit of Capita, one of the largest SIPP & SSAS administrators, highlights the fact that the increasing costs of regulation and the likely capital adequacy requirements will be prohibitive for many SIPP providers.
Most advisers already have stringent due diligence processes in place, but Xafinity is recommending that they pay particular attention to the specific risk of their chosen providers exiting the market.
Each provider exit creates great uncertainty for the clients involved and, whilst it potentially reflects poorly on advisers, it also gives rise to the costs of rework which advisers and clients could well do without.
Jeff Steedman, SIPP & SSAS Business Development Manager at Xafinity, commented:
“The shape of the SIPP market is likely to be quite different in two years’ time and we wouldn’t be surprised to see other high profile names follow Capita’s example.
We would urge advisers to increase their due diligence for new business as some SIPP providers will try to hold out until the last minute and this could end up compromising the adviser’s relationship with their client if the resultant closure, sale or merger is not handled well. A regular review of all existing SIPPs should also be on the adviser’s agenda for 2014.”
